The State Bank of Pakistan (SBP) decided to prohibit all banks from using the securities classified under ‘Held to Maturity’ for borrowing from the SBP in open market operations or reverse repo facility with effect from October 19, 2012, according to a circular issued to the presidents and chief executive officers of all financial institutions.
It may be recalled that banks were earlier allowed to use the securities classified under the held to maturity category for borrowing under the SBP repo facility discount window. A held to maturity security is a debt or equity security that is purchased with the intention of holding the investment to maturity.
Published in The Express Tribune, September 29th, 2012.
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