BB lifts interest cap for NFCD accounts

The Bangladesh Bank has been implementing a number of initiatives to address the steadily declining foreign exchange reserves, especially by tightening the outflow of USD through discouraging non-essential imports.

As part of these initiatives, the banking regulator has lifted the interest cap on Non-Resident Foreign Currency Deposit (NFCD) accounts until further notice in a bid to boost USD inflow from abroad, apart from export and remittance incomes.

The Bangladesh Bank’s Foreign Exchange Policy Department (FEPD) issued a circular in this regard on Sunday.

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This latest move will allow banks to pay interest to any NFCD account holder at higher rates, thereby encouraging foreign depositors to increase USD inflow in the country, said an official of the central bank.

Authorized Dealer Banks (ADs) are paying interest on deposits to such accounts at the Eurocurrency deposit rates. At present, the average Euro currency deposit rate is between 1.5 to 2.5 per cent, according to the various ADs.

The circular stated that the relaxation will also be applicable to NFCD accounts maintained by foreign nationals and companies/firms registered and/or incorporated abroad, banks, other financial institutions including institutional investors and 100 per cent foreign owned (A-Type) industrial units in the EPZs/EZs/HTPs in Bangladesh.

According to the guidelines for foreign exchange transactions, all non-resident Bangladesh nationals and persons of Bangladesh origin – including those having dual nationality and ordinarily residing abroad – may maintain interest bearing time deposit accounts called Non-Resident Foreign Currency Deposit (NFCD) accounts with the ADs.

Bangladesh nationals serving with embassies/high commissions of Bangladesh in foreign countries and also the officers/staff of the government/semi-government departments/nationalised banks, and employees of corporate bodies posted abroad or deputed with international and regional agencies such as IMF, World Bank, IDB, ADB during their assignments abroad may open such accounts.

Crew members of the Bangladeshi shipping companies are not entitled to open such accounts, but shore staff posted abroad may open one.

Accounts may also be opened with funds transferred from existing foreign currency accounts maintained by the wage earners with the ADs in Bangladesh.