BB revises underwriting obligations of 3 SCBs
Friday, 12 September 2008
Siddique Islam
The central bank has revised the underwriting obligations of three state-owned commercial banks (SCBs) at 12.50 per cent from existing 12 per cent in primary auctions of government securities.
The three SCBs have also been asked to activate their trading of government securities to bringing dynamism in the country's secondary market, officials said.
The decision was taken at a meeting with the chief executive officers of three SCBs -Sonali, Janata and Agrani -held at the central bank Thursday with Deputy Governor of the Bangladesh Bank (BB) Ziaul Hassan Siddiqui in the chair.
The central bank instructions came against the backdrop of weak performances of the SCBs in the trading of government securities in the secondary market during fiscal 2007-08 (FY 08).
A total of Tk 103.80 billion was traded on treasury bills (T-bills) and bonds in the secondary securities market in the last fiscal while Sonali, Janata and Agrani traded Tk 2.39 billion, Tk 6.36 billion and Tk 6.65 billion respectively.
Jamuna Bank Limited obtained top position in terms of secondary transactions of the government securities in FY 08 while National Credit and Commerce (NCC) Bank Limited held second position, according to the central bank statistics.
The Jamuna Bank traded Tk 25.57 billion government securities in the secondary market in FY08 and the NCC Bank Limited Tk 25.51 billion, the BB's data showed.
"We have decided to re-fix the underwriting obligations of three SCBs in primary auctions of government securities aiming to boost the secondary market," a BB senior official told the FE.
He also said the central bank will revise the underwriting obligations of all eight primary dealer banks and a non-banking financial institution (NBFI) after completing re-fixation of such obligations for the SCBs.
The BB earlier selected nine PDs - eight banks and a non-banking financial institution (NBFI) - to handle government-approved securities in the secondary market.
The central bank has already amended the guidelines for PDs allowing commission and liquidity support to activate the secondary market.
Under 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.
"We have already taken different measures to gear up trading of government securities in the secondary market," a senior official of a SCB told the FE after the meeting.
He also said the SCBs have assigned targets to their officials to increase trading volume in the secondary market.
Currently, three T-bills are being transacted through auctions to adjust the government borrowing from the banking system.
The T-bills have 91-day, 182-day and 364-day maturity periods.
The 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.
A 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.
On the other hand, four government bonds - 5-year, 10-year, 15-year and 20-year - are being traded in the markets.
The central bank has revised the underwriting obligations of three state-owned commercial banks (SCBs) at 12.50 per cent from existing 12 per cent in primary auctions of government securities.
The three SCBs have also been asked to activate their trading of government securities to bringing dynamism in the country's secondary market, officials said.
The decision was taken at a meeting with the chief executive officers of three SCBs -Sonali, Janata and Agrani -held at the central bank Thursday with Deputy Governor of the Bangladesh Bank (BB) Ziaul Hassan Siddiqui in the chair.
The central bank instructions came against the backdrop of weak performances of the SCBs in the trading of government securities in the secondary market during fiscal 2007-08 (FY 08).
A total of Tk 103.80 billion was traded on treasury bills (T-bills) and bonds in the secondary securities market in the last fiscal while Sonali, Janata and Agrani traded Tk 2.39 billion, Tk 6.36 billion and Tk 6.65 billion respectively.
Jamuna Bank Limited obtained top position in terms of secondary transactions of the government securities in FY 08 while National Credit and Commerce (NCC) Bank Limited held second position, according to the central bank statistics.
The Jamuna Bank traded Tk 25.57 billion government securities in the secondary market in FY08 and the NCC Bank Limited Tk 25.51 billion, the BB's data showed.
"We have decided to re-fix the underwriting obligations of three SCBs in primary auctions of government securities aiming to boost the secondary market," a BB senior official told the FE.
He also said the central bank will revise the underwriting obligations of all eight primary dealer banks and a non-banking financial institution (NBFI) after completing re-fixation of such obligations for the SCBs.
The BB earlier selected nine PDs - eight banks and a non-banking financial institution (NBFI) - to handle government-approved securities in the secondary market.
The central bank has already amended the guidelines for PDs allowing commission and liquidity support to activate the secondary market.
Under 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.
"We have already taken different measures to gear up trading of government securities in the secondary market," a senior official of a SCB told the FE after the meeting.
He also said the SCBs have assigned targets to their officials to increase trading volume in the secondary market.
Currently, three T-bills are being transacted through auctions to adjust the government borrowing from the banking system.
The T-bills have 91-day, 182-day and 364-day maturity periods.
The 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.
A 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.
On the other hand, four government bonds - 5-year, 10-year, 15-year and 20-year - are being traded in the markets.