Yields on treasury bills (T-bills) declined on Sunday as banks channelled their excess liquidity into government securities, amid subdued private credit demand ahead of the upcoming national elections.
The cut-off yield, commonly referred to as the interest rate, on the 91-day T-bill dropped to 9.51 per cent from 9.69 per cent in the previous auction.
The yield on the 182-day T-bill also fell to 9.71 per cent from 9.89 per cent, while the 364-day T-bill yield eased to 9.60 per cent from 9.70 per cent, according to the auction results.
On the day, the government raised Tk 75 billion by issuing the three types of T-bills to partly finance its budget deficit.
"Most banks are preferring to invest their excess funds in risk-free government securities, given the weaker private-sector credit demand ahead of the general election," a senior official of Bangladesh Bank (BB) told The Financial Express.
Private sector credit growth slowed to 6.35 per cent year-on-year in August 2025, down from 6.52 per cent a month earlier, reflecting waning business confidence and tighter lending conditions.
The BB official added that increased liquidity inflows in the money market have also contributed to the fall in T-bill yields.
The central bank's ongoing interventions, through the purchase of US dollars from banks via auctions, have recently injected additional liquidity into the system.
Since July 13, Bangladesh Bank has bought US$2.09 billion directly from commercial banks under the current
free-floating exchange rate arrangement, according to official data.
At present, four types of T-bills - with maturities of 14, 91, 182 and 364 days - are auctioned to manage government borrowing from the banking system. In addition, five government bonds, with tenures of 2, 5, 10, 15, and 20 years, are actively traded in the market.
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