Dhaka, Oct 31 (V7N)- The central bank announced today that banks will no longer be required to adhere to the Secured Overnight Financing Rate (SOFR) caps when determining interest rates for Resident Foreign Currency Deposit (RFCD) accounts. Instead, banks can set interest rates for these deposits based on their relationship with customers or prevailing market rates.

This new directive was outlined in a circular issued to all authorized dealer branches of scheduled banks.

RFCD accounts are savings accounts that enable Bangladeshi residents to manage and access foreign currency. Previously, banks were mandated to offer an additional 1.5% interest on these deposits, which was linked to the international benchmark SOFR. Currently, with the SOFR at 5.3%, this meant banks were required to provide a total interest rate of 6.8% on RFCD accounts.

A retail banking head at a private bank, who requested anonymity, explained that the central bank has shifted its stance and no longer intends to regulate deposit and loan interest rates through circulars. Instead, it aims to allow market forces to dictate these rates.

The banker further noted that deposits in RFCD accounts are considered current deposits, meaning customers can withdraw their funds at any time. Presently, customers receive a maximum interest of 2% on deposits in taka made in current accounts.

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