Bankers raised their eyebrows as the government slashed its bank borrowing target nearly 59 per cent for the last 13 days of this month.
Officials said the deep cut came despite a negative trend in such borrowing in the first half (H1) of the current fiscal year (FY), 2015-16.
Under the revised target, the government is set to borrow Tk 14 billion from the country's banking system through issuing its treasury bills and bonds from January 19 to January 31 instead of Tk 34 billion.
The central bank has already communicated the revised Treasury Bills (T-bills) and Bangladesh Government Treasury Bonds (BGTBs) auction calendar for the month of January to all the commercial banks.
"We've revised our auction calendar for T-bills and BGTB in line with the finance ministry advice," a senior official of the Bangladesh Bank (BB) told the FE.
The revised auction calendar has already come into effect, the official added.
Talking to the FE, a senior official close to government debt-management activities said the Ministry of Finance (MoF) re-fixed its bank borrowing target for the period under review for doing government cash management properly.
"We'll finalise the auction calendar for the month of February within the next week considering the overall situation," the official said.
He wouldn't elaborate on the government borrowing blueprint.
Currently, government holds nearly Tk 65 billion in excess liquidity in its accounts.
Bankers, however, raised their eyebrow. They are concerned that slashing the government's borrowing target would push up liquidity with the banks as well as erode their profitability.
"Lowering bank borrowing than the announced level is also hampering our business plans," a senior official of a leading private commercial bank (PCB) told the FE.
Meanwhile, the overall excess liquidity with the banks mounted to around Tk 1.20 trillion as of December 10 last.
On the other hand, the government repaid Tk 35.77 billion more than fresh borrowing from the banking system during the July-December period of the FY 16.
The borrowing was Tk 49.50 billion in the same period of the previous fiscal, the BB data showed.
The government net borrowed only Tk 1.59 billion from all scheduled banks through issuing T-bills and BGTBs as on December 31 last year to finance the budget deficit partly for the ongoing FY16.
On the other hand, Tk 37.35 billion was paid to the central bank against its total liabilities.
"The government did not increase its net borrowing from the banking system rather repaid a portion of debts due to a rise in sales of savings instruments and slow implementation of Annual Development Programme (ADP) projects," another official explained.
Government's borrowing through the national savings instruments rose to Tk 113.26 billion in the first five months of the FY 16 from Tk112.42 billion in the same period of the FY 15.
The net sales of the national savings instruments have increased slightly recently despite the slashing of yields mainly due to lower interest rates on deposits, offered by the commercial banks, the official added.
"Falling trends in prices of commodities, including petroleum products, on the global market have helped the government to lessen borrowing from the banking system," the official noted.
The import of petroleum products dropped by 41.10 per cent in terms of value to $1.10 billion during the July-November period of the FY 16 from $1.87 billion in the same period of the previous fiscal.
The government is set to take Tk 385.23 billion from the country's banking system through issuing both short-and long-term securities during the current fiscal.
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