When commercial banks face liquidity issues, they borrow money from the central bank, and this is called repo. Repos are now available for 7, 14 and 28 days.
The decision to make banks manage funds more efficiently was made at a meeting of the central bank’s deputy governor and the treasury heads of commercial banks.
The International Monetary Fund (IMF) has been urging the Bangladesh Bank for this decision for some time.
The Bangladesh Bank last year changed the repo system from two days a week to one.
But bankers feel such a step will put more liquidity pressure on commercial banks at a time when the latter are intensifying their focus on private-sector-credit growth because of the gradual fall in yields of government securities, as per Bangladeshi media reports.
They think it would burden banks further through by disrupting their fund-settlement commitments in the current context of liquidity tightness on the money market.
ALCHEMPro News Desk (DS)
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