BB cancels 360-day special repo

The central bank canceled the 360-day special repo facility due to the improvement in the coronavirus situation and a lack of demand for the borrowing tool.

The regulator issues a notice in this regard on Tuesday.

In May 2020, the Bangladesh Bank introduced the special repo in order to implement the stimulus packages, unveiled by the government and the BB, and to ensure smooth liquidity management. A repurchase agreement, or repo, is a short-term agreement to sell securities in order to buy them back at slightly higher prices.

Under the special repo, banks and financial institutions were able to borrow against additional treasury bills and bonds of statutory deposit rate with the BB. Typically, 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 5.50 percent.