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Against the coronavirus outbreak, Bangladesh Bank has again lowered policy interest rates and bank deposits. This will increase the amount of cash available to banks, and they can borrow money from the central bank at a lower interest rate. Earlier on March 25, one-way policy interest rates and bank deposit rates were reduced.
To counter the economic crisis threatened by Corona, the market must increase liquidity. That is why the central bank has to reduce the interest rate and deposit rates in two days within two days.
In a statement today, the central bank said that to offset the adverse impact on the economy due to the crown, the financial markets announced by the Prime Minister should provide the necessary liquidity to the foreign exchange market. For this purpose, the banks cash deposit (CRR) was set weekly at an emergency meeting of the Bank of Bangladesh Monetary Policy Committee, from 5% to 5% in two weeks, and from 5% to 5.7% daily, which will take effect from April 1.
Banks must deposit cash into the central bank in the form of a CRR for certain parts of the deposit. The new decision will increase cash flow in the hands of banks. Clients will have the benefit of satisfying the demand for money.
In addition, the Bank of Bangladesh repurchase interest rate has been reduced from 5.4 percent to 5.7 percent per year, which will be effective from April 12. Through the repository, banks borrow money from the central bank for a short time. This will allow you to borrow money at a slightly lower interest rate.
On April 4, Prime Minister Sheikh Hasina announced a package of 8 trillion Tk to overcome the possible economic impact of the coronavirus outbreak. Earlier, the Prime Minister announced a package of Tk 1 crore for the garment sector. As a result, the total amount of financial assistance in the five packages is 12.5 billion taka, which is approximately 2 percent of GDP. Much of it will go from banks. For this, Bangladesh Bank has taken the initiative to lend money to low interest banks, reducing the amount of deposit.
Earlier on March 25, the central bank said that starting April 1, banks’ cash deposits (CRRs) will be 5 to 5 percent on a two-week basis. And daily, it will be 5 to 5 percent. In addition, the Bangladesh Bank repo interest rate was reduced from 5 percent to 25 basis points annually, and the interest rate was set at 9.5 percent.
Bangladesh Bank officials have said that Bangladesh Bank will take more initiatives to pay less interest in the market. Bangladesh Bank’s interest rate or bank rate will also be reduced. Low-interest refinance funds will also be established.
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