Dhaka, Bangladesh (BBN) - The central bank has phased out the 28-day repo from April 10 aiming to manage the money market efficiently through streamlining the ongoing liquidity support to the scheduled banks, officials said.
The country’s commercial banks are now allowed to borrow from the central bank against repo window in three segments of 7-day, 14-day and 28-day tenures.
“From April 10 next, the repo auctions for 7-day and 14-day tenures will only be held,” the Bangladesh Bank (BB), the country’s central bank, said in a notification on Monday.
To meet one of IMF (International Monetary Fund) conditions binding its $4.70-billion lending package taken for stabilising Bangladesh’s macroeconomic situation, the central bank has cut down the daily liquidity support against the repo facility to twice a week (Monday and Wednesday) since last July. Later, it was reduced to once a week (Tuesday) with effect since November last.
As per the plans, the 14-day repo facility may phase out from July 01 this calendar year on the same ground, according to a central banker.
Actually, the BB’s latest move is aimed at reducing dependency on liquidity support from the central bank and encouraging banks to manage their liquidity independently.
BBN/AD/SI