Banks invited to cash term deposits of exporters’ retention quota balances

Bangladesh Bank has today requested banks to encash term deposits of Exporter Retention Quota (ERQ) balances.

The order came two weeks after the central bank ordered banks to immediately cash out 50% of the balance held in ERQ accounts.

The instruction also applies to ERQ balances held in term deposits, the banking regulator said in a notice published today.

During encashment, banks will have to apply interest payable on accounts, up to the date of encashment, without adhering to the early encashment procedure, the BB said.

In Bangladesh, exporters are allowed to retain part of their earnings in QRE accounts to settle letter of credit debts without incurring exchange losses.

The central bank has stepped up efforts to increase the supply of US dollars as the foreign exchange market faces severe shortages of US greenbacks amid the gaping gap between imports and exports.

On July 14, the BB also revised the retention limit on realized export earnings, reducing them from 15%, 60% and 70% to 7.50%, 30% and 35%, respectively. The new limit will remain valid until December 31.