Bangladesh Bank Defers Rollback of 14-Day Repo by Three Months

Jul 2, 2025 2 min read

The Bangladesh Bank has postponed the planned phase-out of its 14-day repo facility until at least October 2025, providing commercial banks a critical liquidity lifeline as the central bank finalises its intraday liquidity facility (ILF).

Deferral to Facilitate ILF Launch

In April, the central bank had announced its intention to eliminate the 14-day repo by July, in line with an IMF condition aimed at reducing banks’ overreliance on longer-tenor repo funding.

Officials now say core banking upgrades, RTGS integration and financial market infrastructure enhancements required for the ILF will take a minimum of three months to complete.

Bankers Welcome the Breather

Bankers across the board applauded the delay. Without the ILF, they warned, moving exclusively to a seven-day repo would leave a morning-to-afternoon funding gap on maturity days, undermining fund-settlement and CRR compliance.

Md Shaheen Iqbal, Deputy Managing Director and Head of Treasury at BRAC Bank, noted that automatic morning deductions and afternoon repo disbursements under the current system create a window of settlement risk. He said the forthcoming ILF—where intraday advances against securities are provided and then netted off once fresh repo is accepted—will smooth that cycle and bolster liquidity management.

Heavy Reliance on Repo Funding

A senior treasury head at a leading commercial bank (requested anonymity) underscored that many lenders use the 14-day repo to meet their 4.0 percent CRR requirement—currently around Tk 750 billion—only to invest the proceeds in longer-term government securities for higher risk-free returns. He warned that true reduction in repo dependency will be essential once the 14-day window eventually closes.

Repo Usage Trends

Latest Bangladesh Bank data show scheduled banks borrowed a combined Tk 1.33 trillion under repo in May 2025:

84 percent via 14-day repo
Tk 153 billion through seven-day repo
Tk 54.19 billion from overnight facilities

In April and March, total repo borrowings stood at Tk 940 billion and Tk 838 billion, respectively. The central bank has already cut back repo operations to weekly and scrapped the 28-day repo in April.

Next Steps

With the ILF’s backend systems expected online by October, Bangladesh Bank will reassess the repo tenor mix. In the interim, the three-month deferment of the 14-day facility offers a much-needed cushion to commercial lenders grappling with liquidity pressures.