Cenbank restricts repo lending to Tuesdays from next month
From 1 July, banks were allowed to borrow through repo lending from the central bank two days a week
Starting from 1 November, banks will be able to borrow through repurchase agreements (repo) from the Bangladesh Bank once a week, only on Tuesdays, according to a circular issued by the central bank on Monday (21 October).
In addition to the weekly repo lending, banks will be able to take overnight repo on the day of the Reserve Maintenance Period (RMP) for the convenience of maintaining the Cash Reserve Ratio (CRR) of the banks, the circular stated.
This move comes after the central bank halted its daily repo lending from 1 July, as part of efforts to stabilise the currency market and improve currency management. Since then, banks have been able to access repo loans on Mondays and Wednesdays.
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Repo lending allows banks to borrow short-term funds from the central bank. The open-market operations involve the central bank buying and selling government securities to regulate money supply and credit conditions.
According to the circular, in cases when a Tuesday coincides with a holiday, repo lending will be conducted on the subsequent working day.
The circular also clarified that the Standing Lending Facility and Standing Deposit Facility will continue to operate daily at prevailing rates.
