Dhaka, Bangladesh (BBN)- Bangladesh interim government has planned to start buyback of its securities from the upcoming fiscal year (FY), 2025-6, aiming to manage liquidity efficiently.
As per the government’s planning, the Bangladesh Bank (BB), the country’s central bank, has asked the primary dealer (PD) banks to prepare for the buyback arrangement of the government securities (G-Sec) from the FY’26.
The directive came at a quarterly tripartite meeting held at the central bank headquarters in Dhaka on Wednesday, with Istequemal Hussain, Director at the Debt Management Department of BB, in the chair.
Representatives from all the PD banks and the Ministry of Finance were present at the meeting that reviewed the overall market situation.
Central bankers expect that the arrangement will help keep the government maturity profile smooth.
The BB, however, is working to star the buyback arrangement of the government securities and ‘bond swishing’ from FY '26 for effectively managing liquidity, they explained.
Currently, four treasury bills (T-bills) are transacted through auction to adjust government borrowings from the banking system. The T-bills have 14-day, 91-day, 182-day and 364-day maturity periods.
Furthermore, five government bonds, with tenures of two, five, 10, 15 and 20 years respectively, are traded on the market.
At the meeting, the senior officials of the PD banks sought fresh liquidity support from the central bank after phasing out their assured liquidity support (ALS) to manage funds properly.
The central bankers informed the meeting that the BB is considering introducing intra-day liquidity facility (ILF) from July, 2025 to facilitate the banks manage their liquidity smoothly.
The central bank of Bangladesh earlier selected 24 PDs to manage the government-approved securities in the secondary market.
A PD will be eligible for liquidity support from the BB for its operations, collateralised by treasury bills and government securities from its own positions, through the repo mechanism or such other arrangements, as the BB may prescribe from time to time.
A PD will be entitled to an underwriting commission on the issues of dated government securities underwritten by it, at rates prescribed by the government from time to time.
The PDs will subscribe and underwrite primary issues and make secondary trading deals with two-way price quotations.
BBN/SSR/AD