PD banks want half-yearly auction schedule for T-bills, bonds

AKM Zamir Uddin | Published: 23:07, Jul 16,2017 | Updated: 00:26, Jul 17,2017

 
 

People walk past a branch of Mutual Trust Bank Ltd at Kakrail in Dhaka recently. Country’s 12 primary dealer banks including MTBL have requested Bangladesh Bank to take initiative so that the finance ministry prepares the auction calendar, a government’s bank borrowing schedule, on half-yearly basis instead of the existing one-month basis. — New Age photo

Country’s 12 primary dealer banks have requested Bangladesh Bank to take initiative so that the finance ministry prepares the auction calendar, a government’s bank borrowing schedule, on half-yearly basis instead of the existing one-month basis.
The Primary Dealers Bangladesh Ltd, an organisation of the 12 commercial banks, placed the proposal before the central bank on June 21 saying that their assets and liability management would run properly if the government sets the auction calendar on half-yearly basis.
A BB official told New Age on Sunday that the PDs had recently faced problem in managing their assets and liabilities as the government borrowing from the banking system had fluctuated significantly in recent months.
The government suspended all auctions for treasury-bills and bonds for banks in May and March due to availability of cash with its (government) account, whereas it made huge bank borrowing in June to manage the deficit financing of the fiscal budget in the last moment of the recently concluded fiscal year.
Against the backdrop of fluctuating bank borrowing by the government, the PDs faced trouble in managing their liquidity properly, the BB official said.
The government borrowed around Tk 17,000 crore in June from the banks and it also set a borrowing target of Tk 15,000 crore from the same source for July, according to the central bank data.
It is expected that the government will borrow heavily from the banking source this fiscal year to implement its mega infrastructural projects ahead of the national elections scheduled to be held early 2019, the official said.
‘The PDs are obliged to take part in the auction. The obligation also helped them to invest their excess liquidity in the T-bills and T-bonds in the last few years when the country’s business sector faced a dull situation,’ he said.
The banks will be able to set a suitable rate of interest on their short-term fixed deposit products if the government prepares the auction calendar for every six months, he said.
The central bank, however, is not authorised to prepare the auction calendar as the finance ministry sets the borrowing index in line with the government’s cash requirement, he said.
The official said the BB would forward the PDs’ application to the finance ministry to take decision in this regard.
The 12 PDs are Sonali, Janata, Agrani, Mercantile, National, Southeast, Mutual Trust, Jamuna, Uttara, National Credit and Commerce, AB and Prime banks. 

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