Demand for cash may increase if the shutdown enforced to contain the spread of coronavirus is extended
With an extension to the shutdown becoming imminent to contain the coronavirus transmission, people may need to withdraw money from banks to meet their daily expenses.
Considering the possible increase in demand for cash, the Bangladesh Bank will keep its repo facility open from Wednesday, allowing the banks to collect funds from it for a short period at a certain interest rate, said a circular issued on Tuesday.
To ease banks' cost burden of fund during the Covid-19 pandemic, the central bank has reduced repo rate by 25 basis points to 5.75 percent from March 23.
Like many other countries, Bangladesh has enforced a nationwide shutdown that started on March 26.
However, the government has asked all the banks to keep their services on a limited scale from 10 am to 12 pm.
The Bangladesh Bank on Tuesday also decided to keep call money market open from Wednesday so that the banks can utilise their surplus cash by lending to other banks, and thus earn some interest.
According to central bank data, the highest interest rate of call money market was 5.50 percent on March 24 when banks lent Tk1,386 crore to each other.
Generally, the banks take loan for overnight to seven days from call money market.
The repo facility is available for overnight to 28 days.
From Wednesday, the Bangladesh Bank will keep open the Bangladesh Electronic Funds Transfer Network, a national payment system, so that different institutions can disburse salaries to their employees.