REPOs
REPOs are when the Bank agrees to borrow funds against Treasury Bills or Bonds from a customer for a specified period of time for a mutually agreed rate of interest.
The Treasury Bills or Treasury Bonds are assigned to you as collateral for your investment.
On maturity of the agreement, the investor benefits by being entitled to the principal plus the interest for the period which could either be reinvested or recalled. This is a risk free investment.
The Essentials
You will receive an attractive rate of return
No withholding tax
Easy to convert to money even before maturity as in discounting
Ability to use as a collateral
This is an agreement between the Commercial Bank and you as an investor, where the Commercial Bank agrees to borrow funds against Treasury Bills or Bonds from you for a specific period, at an agreed rate of interest. You will be assigned Treasury Bills or Bonds as collateral for your investment.
Since Treasury Bills and Bonds are backed by Government securities, they are considered to hold virtually zero default risk.
Types of Repo’s
- Overnight Repo – Bank borrowing for a period of 1 day
- Term Repo – Bank borrowing for a period exceeding 1 day
You can decide the period of the investment and upon the maturity of the agreement; you are entitled to the principal plus interest for the period. Treasury Bills at the end of the period can be either re invested or recalled.
Benefits Investing in REPOs
Liquidity – Repos provide the ability to invest cash overnight, making them a critical component in the effort to manage liquidity.
Yield Advantage – Repos generally provide additional yield as compared to traditional money market instruments.
Flexibility – the principal amount of repos can be adjusted up or down as fund cash flows dictate.
Placing a REPO
You can visit a branch of your choice and discuss your requirement with an officer.
Please fill the relevant application form and hand it over to the branch. Remember to take your national identity card, driving license or passport. This is necessary for us to identify you.
If you are a Commercial Bank Online Banking customer, you can also send a request through COMBANK ONLINE.
Withdrawals
Once a formal request is forwarded to the Treasury Department, your Treasury Bills will be discounted based on the market rates.
Terms & Conditions apply
Product information and terms & conditions are subject to change from time to time. Therefore, it is advisable to contact the branch nearest to you for the latest information and prevailing terms & conditions.
Related Categories
Investments
Foreign Exchange
Fixed Income Products
