KARACHI, Sept 28: The State Bank has decided to prohibit all banks from using securities classified under ‘Held to Maturity’ category for borrowing from SBP in Open Market Operations or reverse repo facility from Oct 19, 2012.

“Given the liquidity position of the market, it has been decided that securities classified under ‘Held to Maturity’ category cannot be used for borrowing from SBP in OMOs or reverse repo facility with effect from October 19, 2012,” said a circular issued to the presidents and CEOs of all scheduled banks and DFIs.

The banks were earlier allowed to use the securities classified under ‘Held to Maturity’ category for borrowing under SBP repo facility (OMO) or discount window.

Meanwhile, bankers said that the SBP is trying to reduce the overwhelming participation for OMOs that yield good profits for banks but it also ‘reduces the banks willingness’ to make advances to the private sector.—Staff Reporter