Interest rates on banks’ deposit to drop to single digit: Muhith

FT ONLINE

The interest rates on banks’ deposit will come down to a single digit within a month, Finance Minister AMA Muhith said today.

The minister said this while attending the annual conference of Janata Bank as chief guest at the ballroom of Hotel Pan Pacific Sonargaon.

Later, he met with the private bank owners at the hotel where the owners demanded that the Cash Reserve Ratio (CRR), the money banks keep with the central banks, be brought down to 3 percent from the existing 6.5 percent to help combat liquidity crisis.

The government on March 30 decided to allow state agencies to deposit 50 percent of their funds with private banks, up from the existing ceiling of 25 percent, to tackle liquidity crisis.

Private bank owners Nazrul Islam Mazumder, Salman F Rahman, HBM Iqbal, Nurul Fazal Bulbul and others were present during the meeting.

What is CRR?

Also called the cash reserve ratio (CRR), reserve requirement is the minimum fraction of customer deposits and notes that each commercial bank must hold as reserves or place with the central bank rather than lend out.

It is an important tool for monetary policy as it influences the country's borrowing and interest rates.