BB halts daily repo facility to meet IMF condition
The Bangladesh Bank (BB) has stopped the daily repo facility for banks in line with one of the conditions provided by the International Monetary Fund (IMF) for a $4.7 billion loan programme.
The BB said the repo auctions, through which banks borrow funds from the central bank, will take place twice a week from now, according to a circular issued yesterday.
The BB said that auctions will take place on Monday and Wednesday every week. If there is a holiday, the auctions will be held on the next business day.
Repurchase agreements, or repos, are a form of short-term borrowing by banks.
The lenders keep government securities with the central bank with the condition of buying them back at a specific date, usually for a higher price, to get funds and meet their liquidity requirements.
Banks can generally borrow from the central bank through repo, assured liquidity support facility (ALSF), and standing liquidity facility (SLF). Islamic bank liquidity facility (IBLF) is also offered to Shariah-based banks.
The BB said auctions of the remaining instruments would be held every working day.
The central bank took the decision in line with the recommendations of the IMF, which approved $4.7 billion in loans for Bangladesh last year.
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