BB reduces export retention quota to boost dollar supply

Bangladesh Bank has directed all the authorised dealer (AD) banks to encash half of the foreign currency exporters can retain as the export retention quota (ERQ).

The Foreign Exchange and Policy Department of Bangladesh Bank issued the instructions in this regard on Thursday.

The directive is meant for boosting the supply of hard foreign currency and enhancing liquidity in the foreign exchange market, an official concerned of the central bank, said.

According to the directive, a certain portion of the repatriated export proceeds can be deposited as ERQ under the conventional system.

The rate of retention quota can be 15 percent to 60 percent depending on the level of local value addition. However, this rate is as high as 70 percent for proceeds fetched by the information technology sector.

Now, the central bank decided to revise the retention limit out of the realised export proceeds from 15 percent, 60 percent and 70 percent to 7.50 percent, 30 percent and 35 percent, respectively.

The circular said that the revised limit will remain valid until December 31, 2022.