Bangladesh Bank has decided to discontinue the Assured Liquidity Support (ALS) facility for primary dealer (PD) banks, citing the absence of devolvement in government securities (G-Sec) auctions for over three financial years. Introduced in 2008 to help PD banks meet their underwriting obligations, the ALS allowed them to access liquidity at the repo rate (currently 10%). The IMF had also urged the discontinuation of this facility as part of Bangladesh’s $4.7 billion loan agreement. The move is expected to increase liquidity pressure on banks, with industry leaders voicing concerns over potential challenges in meeting cash reserve ratio (CRR) requirements and participating in government borrowing programs. PD banks borrowed Tk 317.24 billion in liquidity support over 11 working days (Feb 19 – Mar 5), averaging Tk 40 billion daily. Experts suggest that without ALS, PD banks may become less inclined to bid for G-Secs, affecting the government’s domestic financing. The decision is likely to be implemented after the current fiscal year.
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