In April 2025, commercial banks in Bangladesh borrowed Tk 940 billion through the central bank’s repo facility, with 59% (Tk 554 billion) via the 14-day instrument, up from Tk 104 billion in March. This shift follows the Bangladesh Bank’s (BB) discontinuation of the 28-day repo from April 9, 2025, under IMF directives tied to a $4.7 billion loan package. Allegations suggest banks are misusing short-term repo funds by investing them in long-term government securities, violating BASEL-3 asset-liability guidelines and contributing to falling treasury yields. In March, banks borrowed Tk 838 billion in total repo loans, with 72% (Tk 607 billion) from 28-day repos. In April, while Tk 940 billion was borrowed, Tk 1.06 trillion was repaid, resulting in a net injection shortfall of Tk 126 billion. BB plans to phase out the 14-day repo in June 2025 to curb misuse, closing avenues for short-term funds being diverted into long-term investments.
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