A Resident Foreign Currency Deposit (RFCD) account is a savings account that allows Bangladeshi residents to manage and access foreign currency.
Banks will no longer be required to adhere to the Secured Overnight Financing Rate (SOFR) caps when setting interest rates on Resident Foreign Currency Deposits (RFCDs).
Instead, banks will be allowed to determine interest rates for these deposits based on their relationship with the customer or prevailing market rates.
The central bank made the announcement in a circular issued today (31 October). All authorised dealer branches of scheduled banks have been ordered to follow the new rules.
RFCD account is a savings account that allows Bangladeshi residents to manage and access foreign currency.
Before the new directive, banks would need to pay an additional 1.5% interest on deposits in these accounts based on the international benchmark SOFR.
The current SOFR rate is 5.3%, meaning, banks would have to pay 6.8% interest on RFCD accounts.
The head of retail banking of a private bank told TBS on the condition of anonymity that the central bank no longer wants to determine the deposit interest rate and the loan interest rate through circulars. “The regulator now wants to leave these matters to the market.”
The private banker also said deposits made in RFCD accounts are demand deposits.
“The dollars in RFCD accounts can be withdrawn by the customer at any time. At present, a customer enjoys a maximum of 2% interest on deposits amount in taka made in current accounts.”
