Bangladesh Bank has abolished the TT discounting facility previously available to scheduled banks for short-term liquidity or cash collection. The central bank issued a directive on August 3, and said the decision will be considered effective from July 1 this year. Banks will no longer be able to obtain the facility by placing a lien on balances held in their current accounts with Bangladesh Bank.

The facility had been available to scheduled banks since 1994. Under the earlier rules, banks were required to keep an amount equivalent to 20 percent of their approved limit as a lien in their current accounts at the central bank. Those liened funds were not included in the calculation of statutory cash reserves, or CRR.

Bangladesh Bank said several modern mechanisms now meet banks' daily liquidity needs, including the call money market, repo, the Standing Liquidity Facility and interbank borrowing. Use of TT discounting has fallen to nearly zero in recent years. Yet the lien remained against approved limits even when the facility was unused, preventing the funds from being counted as CRR and creating unnecessary pressure in regulatory ratio management.