Bangladesh Bank Headquarters

Dhaka, Bangladesh (BBN)– The central bank of Bangladesh has started blocking funds from the banks’ current accounts for not complying with the advance-deposit ratio (ADR) rules properly, officials said.

Under the latest moves, the country’s central bank has already blocked BDT 760 million from the accounts of two third-generation private commercial banks (PCBs).

The banks mainly maintain their current accounts with Motijheel office of Bangladesh Bank (BB). The BB is running its operations through 10 branches across the country.

The blocked funds will not be considered in calculating CRR (cash reserve requirement) of the banks, according to the officials.

Besides, warning notices have already been served against half-a-dozen banks, asking them to bring down their ADR limit at safe position from the existing limits within the stipulated timeframe for avoiding such blocks, they added.

The central bank had given different timeframe for the banks to comply with the ADR rules properly.

Talking to the BBN, a BB senior official said the central bank has blocked the funds of two banks from their current accounts mainly due to non compliance of the ADR rules.

He also said the bank’s ADR has crossed 85 per cent for several months, which contravenes the BB’s rules.
The central bank of Bangladesh earlier set the safe limit of ADR at 85 per cent for conventional banks and 90 per cent for Shariah-based Islamic banks.

“We’ve blocked the funds in line with Article 29(3) of the Banking Companies Act 1991 amended up to 2013,” the BB official explained.

The banks, which received the warning notices, are trying to boost their deposit positions to comply with the ADR rules immediately, according to market insiders.

They also said the banks concerned will face double effects if the funds, blocked by the BB.

“The interest rates on deposit may move up further shortly following the BB’s latest move to ensure proper fund management by the banks concerned,” a senior banker told the BBN in Dhaka.