BB scraps telegraphic transfer discounting facility against current accounts
The central bank said the facility had become unnecessary due to the availability of alternative liquidity management tools, including the repo, Standing Lending Facility (SLF), call money market and interbank borrowing.
Bangladesh Bank has abolished the Telegraphic Transfer (TT) discounting facility for scheduled banks, under which banks were allowed to obtain short-term liquidity by placing liens on their current accounts maintained with the central bank.
The Banking Regulation and Policy Department issued a circular in this regard today (3 August).
TT discounting is a special facility that enabled commercial banks to borrow short-term funds from the central bank during urgent liquidity needs by placing a lien on their current accounts or without providing additional securities.
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According to the circular, banks now have access to a range of effective sources for day-to-day liquidity management, including the call money market, repo, the Standing Lending Facility (SLF) and interbank borrowing.
"Therefore, there is no longer any need to continue the TT discounting facility against liens on current accounts," the central bank said.
The circular also noted that the facility had seen very limited use in recent years.
Against this backdrop, Bangladesh Bank said the TT discounting facility for scheduled banks would be deemed withdrawn with effect from 1 July.
The directive was issued under Section 45 of the Bank Company Act, 1991, and all managing directors and chief executive officers of scheduled banks have been instructed to implement the decision.
