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RFCD interest rate determined on the basis of the bank-client relationship: Cenbank

RFCD interest rate determined on the basis of the bank-client relationship: Cenbank

A Resident Foreign Currency Deposit Account (RFCD) is a savings account that allows Bangladeshi residents to manage and access foreign currencies

TBS report

October 31, 2024, at 18:15

Last modified: October 31, 2024, 18:19

Bangladesh Bank/BSS file photo

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Bangladesh Bank/BSS file photo

Bangladesh Bank/BSS file photo

Banks will no longer have to adhere to Secured Overnight Financing Rate (SOFR) caps when setting interest rates The Resident Foreign Currency Deposit (RFCD) may instead determine interest on such deposits based on the bank-customer relationship or market rate.

The central bank announced this in a circular issued today (October 31).

All authorized dealer branches of scheduled banks have been ordered to comply with the new rules.

A Foreign Currency Deposit Account (RFCD) is a savings account that allows Bangladeshis to manage and access foreign currency.

Before the new directive, banks would have to pay an additional 1.5% interest on deposits in these accounts based on the international benchmark Secured Overnight Financing Rate (SOFR).

The current SOFR rate is 5.3%, which means banks would have to pay 6.8% interest on RFCD accounts.

The head of a private bank’s retail banking told The Business Standard on condition of anonymity that the central bank no longer wanted to fix deposit and lending rates through circulars.

Now the regulator wants to leave these issues to the market.

The private banker also said that deposits made in RFCD accounts are current deposits.

“The customer can withdraw these dollars at any time. Currently, a customer can avail a maximum of 2% interest on the amount of Taka deposits made in current accounts.”