BB raises banks' lending ceiling

The Bangladesh Bank (BB) on Sunday raised the limit of advance-deposit ratio (ADR) to boost liquidity, in its efforts to help the economy that is already facing the heat of Covid-19 pandemic.

The increased lending ceiling will assist the government in implementing various stimulus packages announced recently.

According to a BB circular issued on Sunday, the ADR of all banks has been increased to 87 per cent from the existing 85 per cent for conventional banks and 92 per cent from the existing 90 per cent for Shariah-based Islamic banks.

The revised limit of ADR will come into effect from April 15, the circular added.

In the changed scenario, the conventional banks can now lend Tk 87 against a deposit of Tk 100 and the Shariah-based Islamic banks Tk 92 against a deposit of Tk 100.

The ADR is considered as a barometer of progress of all financial institutions. A high ADR shows that banks are generating more credit from its deposits and vice-versa.

Earlier, on March 25, the government declared the first stimulus package, amounting to Tk 5,000 crore for the export-oriented sectors, to help the virus-hit economy.

On April 5, Prime Minister Sheikh Hasina announced four new stimulus packages of Tk 67,750 crore to overcome the possible economic shock.

The total size of the five stimulus packages stands at Tk 72,750 crore, which is about 2.5 percent of Bangladesh's gross domestic product (GDP).

Meanwhile, on April 12, the premier once again announced another stimulus package of Tk 5,000 crore to give financial assistance to small and medium farmers and help them face the fallout of Covid-19.

/teb