Banks now to borrow at unified repo rate of 10pc

Commercial banks will now borrow funds at a unified rate by using repo instrument as the central bank is eliminating the existing differentials in lending to the lenders.

The country's scheduled banks currently get liquidity feeding from the Bangladesh Bank against repo using three windows: 7-day, 14-day and 28-day-tenure instruments at varied rates.

As part of the wrap-up decision, the central bank will only charge the policy or repo rate--now 10 per cent--for the borrowed funds from March 9 (tomorrow), whatever the tenure is.

The decision comes following a 50-basis-point cut in daily CRR (cash reserve ratio) maintenance requirement for the banks to ease liquidity pressure in the wake of BB's move to phase out 28-day-tenure repo facility from April 03 next.

Executive director (monetary policy unit) of BB Dr Md. Ezazul Islam says the central bank took the decision as part of modernisation of monetary-policy framework and streamlining liquidity management in the banks.

Citing latest auction of central bank repo facility held on March 4, 2025, the official says the banks borrowed Tk 33.91 billion, Tk 11.0 billion and Tk 116.70 billion using 7-day, 14-day and 28-day repo facilities at 10.10-percent, 10.20-percent and 10.25-percent rates respectively.

"This rate differential will go and banks will get repo facility only at policy rate from Sunday next. It will help banks avoid multiple charges in availing the liquidity facility," the central banker told the FE correspondent.

Hailing the move, deputy managing director and head of treasury and FI at BRAC Bank PLC Md. Shaheen Iqbal, CFA, says this is a positive move of the regulator to set single policy rate for short-term repos, which is the benchmark rate.

"And it is an indication that the interest rate may fall and will impact the short-term government treasury yields in the coming days," the senior banker notes.