The Central Bank has decreased its overnight credit rate from 20 percent to 18 percent effective August 7. This drop in the overnight credit followed a retreat in the Central Bank's refinancing rate from 23 to 21 percent introduced on August 6. The previous alteration of the overnight credit rate from 22 percent to 20 percent was on April 9, 2002, when the Bank decreased its refinancing rate from 25 percent to 23 percent, the public relations department of the Central Bank reported.
Overnight credits are given to a commercial bank to complete payments at the end of a banking day by transferring a credit to its correspondent account and then by writing off funds worth the amount of unredeemed payment documents from its correspondent account. One of the reasons for giving an overnight credit is the fact that a bank has an unredeemed one-day credit.