Banks invited to collect term deposits

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The Bangladesh Bank yesterday asked banks to cash term deposits of Exporter Retention Quota (ERQ) balances.

The order came two weeks after the central bank ordered banks to immediately cash out 50% of the balance held in ERQ accounts.

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The instruction also applies to ERQ balances held in term deposits, the central bank said in a notice yesterday.

“During collection, banks will have to apply the interest due on the accounts, until the date of collection, without adhering to the procedure of early collection.”

In Bangladesh, exporters are allowed to retain part of their earnings in QRE accounts to settle letter of credit debts without incurring exchange losses.

Recently, the central bank has intensified its efforts to increase the supply of US dollars as the foreign exchange market faces severe shortages of US greenbacks amid the gaping gap between imports and exports.

On July 14, the BB also revised the retention limit on realized export earnings, reducing them from 15%, 60% and 70% to 7.50%, 30% and 35%, respectively. The new limit will remain valid until December 31.

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