BB starts buying back govt securities
Friday, 25 December 2009
FE Report
The central bank started buying back government securities Thursday aiming to manage the government's surplus funds properly, officials said.
"We've taken the move against the backdrop of the surplus balance in government account that stands at over Tk 100 billion now," a senior official of the Bangladesh Bank (BB) told the FE.
He also said the central bank will buy back the securities worth over Tk 10 billion within this month in line with the government decision.
On the first day of buying back government securities, the central bank accepted offers worth Tk 5.03 billion from four private commercial banks and a non-banking financial institution (NBFI), the BB officials added.
Under the new arrangement, the central bank will buy only four government bonds and three treasury bills from the banks and financial institutions to reduce the government's debt service liabilities.
Currently, four government bonds - 5-year, 10-year, 15-year and 20-year - are being traded in the markets.
On the other hand, three treasury bills (T-bills) are being transacted through auctions to adjust the government borrowing from the banking system.
The T-bills have the maturity periods of 91 days, 182 days and 364 days.
The market operators welcomed the BB's latest move, saying that the new arrangement would increase the flow of fresh liquidity in the country's banking system.
"The new arrangement will reduce overnight borrowing from both inter-bank market and the central bank, a senior official of a private commercial bank told the FE.
Currently, some primary dealer (PD) commercial banks and financial institutions are holding large amounts of the government securities.
The central bank of Bangladesh earlier selected 13 PDs - 10 commercial banks and three NBFIs - to handle government securities in the secondary market.
The central bank started buying back government securities Thursday aiming to manage the government's surplus funds properly, officials said.
"We've taken the move against the backdrop of the surplus balance in government account that stands at over Tk 100 billion now," a senior official of the Bangladesh Bank (BB) told the FE.
He also said the central bank will buy back the securities worth over Tk 10 billion within this month in line with the government decision.
On the first day of buying back government securities, the central bank accepted offers worth Tk 5.03 billion from four private commercial banks and a non-banking financial institution (NBFI), the BB officials added.
Under the new arrangement, the central bank will buy only four government bonds and three treasury bills from the banks and financial institutions to reduce the government's debt service liabilities.
Currently, four government bonds - 5-year, 10-year, 15-year and 20-year - are being traded in the markets.
On the other hand, three treasury bills (T-bills) are being transacted through auctions to adjust the government borrowing from the banking system.
The T-bills have the maturity periods of 91 days, 182 days and 364 days.
The market operators welcomed the BB's latest move, saying that the new arrangement would increase the flow of fresh liquidity in the country's banking system.
"The new arrangement will reduce overnight borrowing from both inter-bank market and the central bank, a senior official of a private commercial bank told the FE.
Currently, some primary dealer (PD) commercial banks and financial institutions are holding large amounts of the government securities.
The central bank of Bangladesh earlier selected 13 PDs - 10 commercial banks and three NBFIs - to handle government securities in the secondary market.