1.
The interest rate corridor will consist of two
end-of-day Standing facilities offered by State Bank of
Pakistan: Existing SBP 3-day Repo Facility will be renamed
as SBP Overnight Reverse-Repo Facility, which will become
the ‘Ceiling’; and a new SBP Overnight Repo
Facility to absorb excess funds from the market will serve
as the ‘Floor’ of the corridor.
2. The procedure for availing the end-of-day
financing facility from State Bank of Pakistan at the
‘Ceiling’ rate in case the market is short
of funds will continue to be in accordance with the existing
practices and instructions issued by State Bank of Pakistan
from time to time in reference to the ‘SBP 3 day
Repo Facility (now renamed as SBP Overnight Reverse-Repo
Facility) against Government of Pakistan Market Treasury
Bills and Federal/Pakistan Investment Bonds.
3. The overnight end-of-day standing
repo facility at the ‘Floor’ rate will be
available to scheduled banks and primary dealers which
are left with excess funds in the interbank market. These
funds can be placed with State Bank of Pakistan in the
form of an overnight repo against Treasury Bills at the
‘Floor’ rate. Some of the operational
details are as under:
a.
Only scheduled banks and primary dealers will
be eligible to place the funds at the ‘Floor’
rate with State Bank of Pakistan
b. This facility will only be available at
the end of the day, when it can be ascertained that
the market has excess funds.
c. The time for intimating this amount to the
State Bank of Pakistan will be between 2:30pm to 3.30pm
from Monday to Friday and between 12:00pm to 1.00pm
on Saturday. (Specimen format is enclosed).
d. The minimum amount for the Overnight Repo/Reverse
Repo Facility will be PKR.100 million, and in multiples
of PKR. 50 million thereof.
e. The Treasury Bills acquired under the Standing
Overnight Repo facility from State Bank of Pakistan
will be SLR eligible.
4.
The ‘Floor’ and the ‘Ceiling’
rates (and the width of the corridor) will be advised
by the State Bank of Pakistan from time to time as deemed
necessary.
5. State Bank of Pakistan will continue
to conduct term Open Market Operations (OMOs) in the form
of repos/ reverse-repos as per current practice in addition
to these standing facilities.
6. The interest rate corridor will be
applicable from 17Aug, 2009.