Banks asked to encash term deposits

The Bangladesh Bank yesterday asked banks to encash the term deposits of exporters' retention quota (ERQ) balances.

The order came two weeks after the central bank instructed banks to encash 50 per cent of the balance held in ERQ accounts immediately.

The instruction is equally applicable for ERQ balances held in the form of term deposits, said the central bank in a notice yesterday. 

"While on encashment, banks will have to apply the interest payable to the accounts, up to the date of encashment, without adherence to the premature encashment procedure."

In Bangladesh, exporters are allowed to keep a portion of their earnings in the ERQ accounts to settle back-to-back letters of credit liabilities without facing exchange losses.

Recently, the central bank has beefed up its efforts to increase the supply of US dollars as the foreign exchange market is facing acute shortages of American greenback amid the yawning gap between imports and exports.

On July 14, the BB also revised the retention limit out of realised export proceeds, bringing them down from 15 per cent, 60 per cent and 70 per cent to 7.50 per cent, 30 per cent and 35 per cent, respectively. The new limit will remain valid till December 31.