Dhaka, Bangladesh (BBN) – The primary dealers (PD) have urged the central bank of Bangladesh to introduce reverse repurchase agreement (REPO) auction after the banks’ transaction hours to manage fund efficiently.
Under the arrangement, the Bangladesh Bank (BB) will accept offers from the commercial banks in the reverse REPO auction held after the banks’ transaction hours on each working day.
The appeal was made at a meeting with the chief executives and heads of treasury of the PD banks and non-banking financial institutions (NBFIs) held at the central bank in Dhaka on Thursday with its Deputy Governor Abul Quasem in the chair.
Primary Dealers Bangladesh Ltd. (PDBL) Chairman Ehsan Khasru led its team while Association of Bankers, Bangladesh (ABB) Chairman Nurul Amin was present at the meeting as a member of the PDBL.
 “We’ll introduce such reverse REPO auction in line with the market requirement,” a senior BB official said, adding that there is no need for introduction of such auction right now considering the current liquidity position in the banking sector.
Earlier on June 30 last, the central bank allowed commercial banks for the first time to participate in such reverse (REPO) auction after the regular banking hours to minimise demand for assured liquidity support (ALS) on the last working day of the fiscal year 2012-13.
 “We want such reverse REPO auction to comply with the cash reserve requirement (CRR) with the central bank smoothly,” a senior member of the PDBL told BBN in Dhaka.
He also said India and Sri Lanka are now allowing such reverse REPO auction to manage liquidity in the market properly.
The central bank earlier selected 15 PDs — 12 banks and three NBFIs — to deal with the government-approved securities in the secondary market.
“Eight new commercial banks, out of a total nine, will have to perform as PD banks,” another BB official said, adding that the central bank is going to formulate a policy in this connection.
Currently, three T-bills are being transacted through auctions to adjust the government’s borrowing from the banking system. The T-bills have 91-day, 182-day and 364-day maturity periods.
Furthermore, five government bonds having the tenures of two, five, 10, 15 and 20 years respectively – are being traded in the market.
BBN/SSR/AD-19Sept13-11:53 pm (BST)