From next month, November, Bangladesh Bank will provide cash loans to banks once a week through the repurchase agreement (repo) mechanism.
The central bank announced this on Monday (21 October), in a circular issued by the regulatory body of the banking sector.
According to the circular, from 1 November onwards, banks will only be able to borrow funds through repo on Tuesdays each week.
On days of Reserve Maintenance Period (RMP), banks can borrow overnight repo funds to maintain their Cash Reserve Ratio (CRR).
To strengthen the country's money market and improve monetary management, Bangladesh Bank had halted daily repo lending from the start of the 2024-25 fiscal year on 1 July.
Instead, cash loans were provided to banks twice a week, on Mondays and Wednesdays, through the repo mechanism.
Bank officials have explained that the repo mechanism allows banks to borrow short-term funds from the central bank.
As part of this open market operation, the central bank buys or sells government securities to regulate cash supply and lending conditions in the market.
The circular also stated that if Tuesday is a bank holiday, the repo loan will be provided on the following working day.
However, the central bank's Standing Lending Facility and Standing Deposit Facility will continue at their current rates daily, as mentioned in the circular.
