BB to help PDs activate secondary bond market
Tuesday, 24 July 2007
Siddique Islam
The Bangladesh Bank (BB), in its bid to develop the government-approved secondary market, has assured the primary dealers (PDs) of providing all sorts of support, including liquidity backup.
The assurance came at a meeting with the chief executives of PD banks and a non-banking financial institution (NBFI), held at the central bank Monday with the Executive Director Yasin Ali in the chair.
"We have assured the PDs of looking into all aspects to activate the country's secondary market," a BB senior official told the FE Monday.
He also said the central bank is ready to provide liquidity support to the PDs to better their performances.
The PDs are now facing liquidity problem for complying with the existing rules on devolvement relating to government-approved securities.
Under the guidelines, each of the bank and non-bank PD will underwrite a minimum of 12 per cent and 4.0 per cent of the auction amount respectively for fiscal year 2007-08 until further notice.
Sources, however, said the central bank wanted to know why they quoted higher interest rates on some treasury bills last Sunday. As a result, a total of Tk 3.0 billion was devolved back to the BB on the day, the first time after introduction of the amended guidelines for the PDs, which came into effect from July 1.
The PDs urged the central bank to discontinue the auction of 30-day Bangladesh Bank bills to avoid the mismatch of interest rates on government-approved securities. BB officials, in response, assured them of scrutinising the issue.
The Bangladesh Bank (BB), in its bid to develop the government-approved secondary market, has assured the primary dealers (PDs) of providing all sorts of support, including liquidity backup.
The assurance came at a meeting with the chief executives of PD banks and a non-banking financial institution (NBFI), held at the central bank Monday with the Executive Director Yasin Ali in the chair.
"We have assured the PDs of looking into all aspects to activate the country's secondary market," a BB senior official told the FE Monday.
He also said the central bank is ready to provide liquidity support to the PDs to better their performances.
The PDs are now facing liquidity problem for complying with the existing rules on devolvement relating to government-approved securities.
Under the guidelines, each of the bank and non-bank PD will underwrite a minimum of 12 per cent and 4.0 per cent of the auction amount respectively for fiscal year 2007-08 until further notice.
Sources, however, said the central bank wanted to know why they quoted higher interest rates on some treasury bills last Sunday. As a result, a total of Tk 3.0 billion was devolved back to the BB on the day, the first time after introduction of the amended guidelines for the PDs, which came into effect from July 1.
The PDs urged the central bank to discontinue the auction of 30-day Bangladesh Bank bills to avoid the mismatch of interest rates on government-approved securities. BB officials, in response, assured them of scrutinising the issue.