The Bangladesh Bank says private commercial banks have to disburse loans at 9 percent interest rate to get government deposits.
The instructions came in a circular sent to top bank executives on Thursday (May 23).
Earlier on May 20, the finance ministry issued a notification which said government agencies, including the autonomous and semi-autonomous bodies, can keep funds made available for them for projects under the Annual Development Programme (ADP), with private banks at a maximum 6 percent interest.
It said banks, which failed to bring down rates to 9 percent in line with their Aug 2018 pledges, will not get government deposits.
In its negotiation last year to slash the lending rate, private banks managed the Bangladesh Bank to reduce the cash reserve ratio (CRR) by one percentage point to 5 percent, extend the deadline for adjusting ADR that measures loans as the percentage of deposits and lower the repo rate from 6.75 percent to 6 percent.
In April last year, the then-finance minister AMA Muhith said the government will keep 50 percent of its total deposits at private banks in order to tackle the liquidity crisis.