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Corona virus outbreak to deal with economic incentive package 3 The central bank has introduced a special repository (buyback agreement) in which banks and financial institutions will be able to withdraw funds for 360 days by depositing additional treasury bills and bonds Legal Deposit Rate (SLR) with Bangladesh Bank, introducing for the first time a long-term liquidity facility. Bangladesh Bank.
Today, banks and financial institutions can borrow money for up to 28 days. This will alleviate much of the liquidity crisis that banks feared when implementing the stimulus package. However, banks and financial institutions will not be able to use the money through this special repository in any sector other than the incentive package.
According to a Bank of Bangladesh circular, the government and the Bank of Bangladesh have recently announced several financial incentive packages to address the adverse effects of coronavirus on the country’s economy. In order to streamline liquidity management in the money market by implementing these incentive packages, a special repository (repurchase agreement) was introduced for a period of 360 days. Based on the existing repurchase rate, the interest rate of this special repurchase (repurchase agreement) will be determined taking into account the monetary policy announced by the Bank of Bangladesh and the liquidity situation of the money market.
The notification also said that the remaining amount of the nominal value will be paid as a repo applying a margin of 15 percent and 5 percent on the nominal value of the bonds and treasury bills, respectively. In contrast to this repository, all mortgaged securities will be treated as liabilities and these securities will not be treated as collateral or easily exchangeable assets for any other purpose.
Banks are known to currently have additional banknotes and bonds of around Rs 60 billion. With these securities, banks will be able to take funds from the central bank through a special repository.
The money that Bangladesh Bank lends to commercial banks is Ropo. And if there is more money on the market, collect it through the reverse repository. And now Bangladesh Bank has introduced a special 360-day repository system to lend money for special needs.
Prime Minister Sheikh Hasina has announced a new package of Rp 72.75 billion to overcome the possible economic impact of the coronavirus outbreak. The amount of financial assistance in these five packages is approximately 2.52 percent of GDP. In addition to this, the central bank has announced separate packages for agriculture and marginalized people. For this, the central bank has established a refinancing fund of Rs 36 billion. That it will go to the market as new money.
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