What Bangladesh Bank did on July 29 was to reduce the repo rate. This means that just as we do not have a loan from a bank, other banks can also take a loan from Bangladesh Bank. In return for this loan, they have to keep some collateral with Bangladesh Bank as security, such as some government securities, treasury bills, treasury bonds, etc., which they keep with Bangladesh Bank. And in return for this, Bangladesh Bank gives them a loan. The interest rate on this loan which was earlier 5.25 is now 4.75 percent. In other words, other banks borrow from Bangladesh Bank at the rate of only 4.75 per cent and lend to the general public at interest rates of 8%, 9%, 10%, 12%. And the money in the middle is the bank gain.
Reverse repo rate
Then there is the reverse repo rate. In many cases what happens is that a large amount of money is deposited in the bank's bizarre but there are no people to lend, then what Bangladesh Bank does is freeze a certain amount of money or withdraw it from the banks. And in return for withdrawing money from these banks, Bangladesh Bank gives them some interest. And Bangladesh Bank has reduced this reverse repo rate. What was 4.75% has been reduced to 4% now.
Bank rate
Now let's go to the bank rate. In the case of reverse repo rate, what would have happened was that in order to take a loan from Bangladesh Bank, some security had to be kept in Bangladesh Bank. But the bank rate is that other banks can take loans from Bangladesh Bank without any kind of security. And instead you don't have to keep any kind of security in Bangladesh Bank. But a certain amount of interest has to be paid to Bangladesh Bank. And this interest rate used to be 5% and now it is reduced to 4%. In other words, they get loan facility from Bangladesh Bank at only 4% interest and they provide it to the people at 10% and 12% interest. And this is the bank rate.
CRR
CRR (Cash Reserve Ratio) .CRR is, suppose you deposit Rs. At present the CRR rate of Bangladesh Bank is 4% which was 4.75% earlier. And this is done so that banks can control the money market.
SLR
When commercial banks cannot invest anywhere, they buy various government securities from Bangladesh Bank. This is called SLR. Its profit rate is 13% for interest bearing banks and 5% for Islamic banks. However, it is not fixed forever. This rate fluctuates around.
ADR
Now let's not talk about ADR. The full form of ADR is Advance Deposit Ratio. We already know that commercial banks cannot invest 4% for CRR and 13% for SLR for a total of 17%. And the bank fixes ADR on the remaining capital except this money. And this ADR rate can invest 70-80% for ordinary commercial banks and only 92% for Islamic banks. And through this Bangladesh Bank controls the commercial banks.