The Bank's system of accommodation

7-day Repo

The 7-day refinancing facility, based on repurchase agreements (repos), is the main system of providing accommodation to the banking institutions. The objective of the Bank’s seven-day repo facility for banking institutions is to ensure that the refinancing operation of the Bank of Namibia is administered timely, effectively and within agreed service levels. The interest rate charged on this facility is the prevailing Repo rate. The Bank of Namibia, as part of its monetary operations, conducts weekly fixed-rate main repurchase auctions with one-week maturities. These auctions are normally held on Wednedays.

Overnight Repo

The overnight accommodation is also available to banking institutions through this facility. A penalty, above the ruling Repo rate, that is reviewed by the Bank periodically is charged on the overnight repo. The Bank reserves the right to change the penalty if borrowing under this facility suggests that banking institutions are using it for continuous or permanent borrowing.
 

Intraday Lending

The Bank offers intraday loans to the banks, made available by under the Namibia Interbank Settlement System (NISS). Intraday settlement means that settlement takes place on the same day the transaction is entered into. There is no interest charged on the intraday facility.

Eligible Securities

The Bank of Namibia does not undertake any uncollateralized lending. As such, to utilise the aforementioned accommodation facilities collateral has to be pledged by the participating institutions. Provided that sufficient collateral has been secured, the Bank will transfer funds via NISS, and the Banking institutions will do likewise, in case of a reverse repo. Following below is the list of eligible securities which the banks must pledge before being allowed accommodation or funding from the Bank of Namibia:
 

Category 1 securities consist of:

• Government of the Republic of Namibia Treasury Bills;
• Government of the Republic of Namibia Internal Registered Stock;
• Bank of Namibia Bills;
• Securities fully guaranteed by the Government of the Republic of Namibia;
• Separate Trading of Registered Interest and Principal of Securities (STRIPS) stripped by the Government

Category 2 securities consist of:

• Investment graded debt securities of State Owned Enterprises, e.g. NamPower bonds;
• Separate Trading of Registered Interest and Principal of Securities (STRIPS) not stripped by the Government Settlement.