Dhaka, Bangladesh (BBN)- Yields on treasury bills (T-bills) fell below the central bank’s policy rate on Sunday for the first time in more than five months, reflecting ample liquidity in the banking system and subdued demand for private sector credit.
Surplus funds, coupled with strong remittance inflows ahead of Eid-ul-Fitr, have prompted lenders to park excess money in risk-free government securities, driving yields lower, according to bankers.
The cut-off yield, commonly known as the interest rate, on 91-day treasury bills declined to 9.90 per cent from 10.02 per cent previously.
The yield on 182-day bills dropped to 9.98 per cent from 10.11 per cent, while the 364-day T-bill yield fell to 9.94 per cent from 10.07 per cent, according to auction results.
The policy rate—also known as the repo rate—set by the Bangladesh Bank (BB), the country’s central bank, currently stands at 10 per cent.
On the day, the government raised BDT 82.50 billion through the issuance of three types of T-bills to partly finance its budget deficit.
The last time T-bill yields slipped below the policy rate was on September 28 last year, under similar liquidity conditions.
“Most banks are now preferring to invest their excess funds in risk-free government securities due to subdued private sector credit demand amid lingering uncertainty following the just-concluded national election,” a senior central banker said, explaining the current market dynamics.
Private sector credit growth slowed to 6.10 per cent year-on-year in December 2025, down from 6.58 per cent a month earlier, according to the central bank’s latest data.
Officials also noted that higher inward remittance inflows have boosted market liquidity, exerting downward pressure on T-bill yields.
The central bank has continued purchasing US dollars directly from banks to offset strong remittance inflows ahead of the Eid-ul-Fitr, they added.
As part of its ongoing open market operations, the central bank of Bangladesh has bought $5.47 billion from banks since July 13 last year under the prevailing free-floating exchange rate regime.
Currently, four treasury bills—maturing in 14, 91, 182 and 364 days—are auctioned to manage government borrowing from the banking system.
Besides, five government bonds with tenures of two, five, 10, 15 and 20 years are traded in the market.
BBN/SSR/AD