Industry Desk: Banks and non-bank financial institutions (NBFIs) can now collect cash from the central bank through special repurchase agreement (repo) for one year.
The Bangladesh Bank has introduced such long-term repo facilities for the first time to help banks and NBFIs provide loans under the government-declared stimulus packages for coronavirus-hit industries, said a circular issued yesterday.
Generally, the Bangladesh Bank supports cash to the banks and NBFIs for regular repo for one to 28 days. Recently, it reduced regular repo’s interest rate to 5.25 percent twice.
The central bank said in the new circular that special repo rate would be decided at the time of auction by the auction committee. Banks and NBFIs can take this fund by submitting their extra securities of statutorily liquidity reserve to the Bangladesh Bank as lien.
“So, banks and NBFIs can enjoy the securities’ coupon payment,” said a senior official of the Bangladesh Bank.
The official also said the rate of special repo will not vary largely from the regular repo.
The instruction will be in effect immediately and will be continued until further notice, the circular added.
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