Bangladesh central bank has announced a reduction in the daily cash reserve requirement (CRR) for banks, aimed at easing liquidity management in the banking sector. Effective from tomorrow, banks will be required to maintain 3 percent of their time and demand deposits as reserves, down from the previous 3.5 percent. However, the biweekly CRR requirement will remain unchanged at 4 percent stated in a report.
This adjustment is expected to provide banks with slightly more investable funds, enhancing efficiency in liquidity management. Industry experts believe the move will reduce excess reserves, allowing financial institutions to optimize their resources more effectively.
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The latest reduction marks the first change in CRR requirements in nearly five years. In a similar move during April 2020, the central bank had lowered the daily CRR from 4.5 percent to 3.5 percent, while the biweekly reserve was brought down from 5 percent to 4 percent. That decision was taken to boost liquidity in the market and support government stimulus packages during the economic challenges of the time.
This latest measure reflects ongoing efforts to ensure stability and flexibility in the financial sector, allowing banks to better manage liquidity while maintaining sufficient reserves to meet customer withdrawals.
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