- Say the move will help improve liquidity in the interbank call money marketGovernment
- securities market too stands to benefit
- Point out the move will ultimately lead to lower borrowing costs to clients
Sri Lanka’s banking sector yesterday welcomed the move by the Central Bank to relax the restrictions imposed on Standing Facilities to Licensed Commercial Banks (LCBs) under Open Market Operations (OMOs) as it will help improve liquidity.Sri Lanka Banks’ Association (SLBA) Chairman Bingumal Thewarathanthri noted that the decision by the Monetary Board will ultimately lead to lower borrowing costs to clients.
“Today’s (yesterday’s) relaxation of these restrictions will support further to improve the liquidity in the interbank call money market as well as the government securities market as this will enable the banks to borrow from CBSL without any restrictions, in case a need arises,” Thewarathanthri told Mirror Business.
The Monetary Board this week decided to relax the restrictions imposed on the Standing Facilities of Licensed Commercial Banks (LCBs) under Open Market Operations (OMOs).With effect from the reserve maintenance period commencing 16 February 2024, the restriction on the Standing Lending Facility (SLF) will be removed and the restriction on Standing Deposit Facility (SDF) will be relaxed from five times (05) to ten times (10) during a calendar month.
The decision was taken at a special Monetary Board meeting held on Wednesday (7), after carefully reviewing the developments in the domestic money market, as well as the behaviour of LCBs in terms of market participation along with the improvements in liquidity, the Central Bank said.The relaxation of the restrictions on Standing Facilities is expected to accelerate the downward adjustments in market interest rates as envisaged under the overall monetary policy direction of the Central Bank.
( Source : Daily Mirror)
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