BB may revise underwriting obligation rules of SCBs

Siddique Islam brThe central bank is likely to revise the underwriting obligations of three state-owned commercial banks (SCBs) in primary auctions of government securities aiming to bringing dynamism in the secondary market. brThe Bangladesh Bank (BB) officials are scheduled to meet with the chief executive officers of three SCBs -Sonali, Janata and Agrani - that are also functioning as primary dealers (PDs) Thursday in this connection. brWe will discuss the issue with the chief executive officers of the SCBs, a BB senior official told the FE Monday, adding that the central bank would take its final decision after the meeting. brEarlier, the central bank selected nine PDs - eight banks and a non-banking financial institution (NBFI) - to handle government-approved securities in the secondary market. brThe BB has already amended the guidelines for PDs allowing commission and liquidity support to activate the secondary market.brUnder the guidelines, each of the bank and non-bank PD will have to underwrite a minimum of 12 per cent and 4.0 per cent of the primary auction amount respectively. brMeanwhile, the country's secondary securities market has gradually improved as participation of commercial banks and life insurance companies increased. brA total of Tk 24.50 billion was traded on treasury bills (T-bills) and bonds in the secondary securities market in August last, market operators said. brThe functions of secondary market remained operational among banks and life insurance companies only, a senior treasury official of a PD bank told the FE. brHe also said the interest rates on the government securities will have to be revised on market-base to attract general investors for investment in the securities. brCurrently, three T-bills are being transacted through auctions to adjust the government borrowing from the banking system. brThe T-bills have 91-day, 182-day and 364-day maturity periods. brThe central bank earlier dropped the 28-day tenure T-bill from its auction system in line with the cash and debt management committee's recommendation.brA high-powered committee on cash and debt management, headed by the finance secretary, is now working on the separation of the cash management from that of the public debt management.brOn the other hand, four government bonds - 5-year, 10-year, 15-year and 20-year - are being traded in the markets.br