Circulars/Notifications - Banking Supervision Department  
 BPRD Circular No. 40
November 17, 1999  

All Banks/NBFIs. Covered
Under Section 3A of BCO

Dear Sirs,

Directive Under Sec. 41 of BCO-REPO Transactions

With a view to bringing about operational improvements in the money market transactions, to strengthen the repurchase market and to ensure transparency, it has been decided that with effect from 30th November 1999, banks/NBFls will enter into Master REPO agreement with the counter party before entering into REPO transactions.

  1. In respect of REPO transactions, banks/NBFls will ensure the following:

i) Any transaction involving government securities either for repurchase or as

collateral will be accompanied by same day movement of securities through SGLA or physical delivery of security, as the case may be, alongwith full movement of funds. Further, securities held/acquired by banks/NBFls on account of transactions with customers other than banks/NBFls, will neither be counted towards SLR of the concerned bank/ NBFl nor will be utilized for onward REPO with other banks/NBFls.

ii) To ensure proper monitoring of cash flow, and interest rate risk, all REPO

transaction will be for fixed maturity.

iii) Banks will revalue their security holdings on daily basis with effect from 1st

January 2000. The rate used for the purpose will be KIBR (Karachi Inter-

Bank Rate) which will be introduced shortly. In case KIBR is not available,

rate) obtained by the bank from an independent and reliable source will be

used till such time KIBR is introducing in the market.

3. Any bank/NBFl found violating the above instructions shall render itself liable to penalties under the provisions of the Banking Companies Ordinance, 1962 and may be prohibited to undertake REPO transactions for such period as the State Bank may determine on case to case basis.

Please acknowledge receipt



       
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