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The Bangladesh Bank on Monday reduced the mandatory cash reserve ratio for the banks to 5 per cent from 5.5 per cent with a view to supply liquidity to the market during the coronavirus pandemic, said a BB circular issued on the day.
An official of the central bank said that the banks would get access to the liquidity that they kept with the central bank as part of risk mitigation.
As the requirement of cash would increase ahead of the ten-day closure of the government entities, the relaxed provision would help banks tackling the emergency cash requirement, the official said.
The rate of repurchase agreements (REPO) was also lowered to 5.75 per cent from 6 per cent allowing the banks to borrow more funds from the central bank to meet their cash requirement. The reverse REPO rate at kept unchanged at 4.75 per cent.
On Monday, the BB also instructed all the scheduled banks to extend financial assistance to the local administration and to individuals affected by the coronavirus pandemic to combat the outbreak in the country.
A BB circular issued on the day also allowed banks to spend more than 20 per cent of their corporate social responsibility funds for the health sector.
In the last few days, the BB has issued a set of instructions to the banks along with policy measures to contain the financial impacts of the epidemic.
Mentioning the growing risks of the pandemic in the country, the central bank on Monday suggested the banks to provide the necessary protective gears upon consultation with the government’s designated hospitals or health complexes, the BB said.
The protective gears can include hand gloves, masks, hand sanitisers, anti-bacterial handwash and alkalised soaps and essential drugs along with other health equipment, the BB mentioned.
To this end, the banks were suggested to extend financial assistance from their CSR funds on humanitarian grounds.
In doing so, the central bank allowed the banks to spend up to 60 per cent of their CSR funds.
To combat the pandemic, the banks were instructed to take emergency measures to ensure the safety of their employees by providing employees with the necessary protective gears.
In another circular, the central bank on the day extended the advance payment limit without repayment guarantee for the import of live-saving drugs used in treatment of coronavirus, medical kits or equipment and other essential medical items.
Without the repayment guarantee, the importers would be able to avail advance payment facility for up to $5,00,00 against import of such medical items. The scope will be valid till September 30 this year.
Earlier, the limit was set at $10,000 against admissible imports.
To facilitate the import of industrial raw materials and to minimise the coronavirus-related disruptions, the central bank allowed the banks to extend the usance period of financing from 180 days to 360 days.
(NA)
