Bangladesh Bank cuts CRR for banks to 3% to boost liquidity

The new directive will take effect from Mar 5

Bangladesh Bank has reduced the cash reserve ratio, or CRR, for scheduled banks from 3.5 percent to 3 percent on daily deposits.

However, the rate will remain unchanged at 4 percent on a bi-weekly average basis.

The central bank's Monetary Policy Department issued a notification on Tuesday to all managing directors and chief executive officers of banks regarding the new directive, which will take effect on Mar 5.

CRR refers to the minimum cash deposit that a bank must maintain with Bangladesh Bank, based on the total amount of deposits it holds.

According to the notification, the new measure aims to improve the monetary policy and strengthen liquidity management.

Currently, scheduled banks, including Islami Shariah-based banks, are required to maintain a minimum of 4 percent of their total demand and term deposits on a bi-weekly average basis, and a minimum of 3.5 percent daily in cash deposits with the central bank.