Dhaka, Bangladesh (BBN) - The government has increased slightly underwriting commission for the primary dealers aiming to make the PD system attractive, officials said on Tuesday.
“The government has increased the commission in line with the cash and debt management committee (CDMC)’s recommendation,” a senior official at the Bangladesh Bank (BB) told BBN in Dhaka, adding that the central bank would inform the PDs about the revised underwriting commission shortly.
Under the new provisions, the PDs will get 3.5 paisa as commission for Treasury bills (T-bills) up from the existing level of 2.5 paisa, while the PDs will receive 8.5 paisa for treasury bonds up from 7.5 paisa.
Three best PDs of each quarter, however, will get 4.5 paisa for T-bills from the existing level of 3.0 paisa. In the case of T-bonds, they will receive 9.5 paisa as underwriting commission from 8.0 paisa.
The increased underwriting commission will come into effect from April 1 this year, they added.
“It’s an incentive for the PDs. It will also help make the PD system attractive,” another BB official said, adding that the central bank plans to provide more incentives to the PDs.
Currently, three T-bills are being transacted through auctions to adjust the government borrowing from the banking system.
The T-bills have 91-day, 182-day and 364-day maturity periods.
On the other hand, four government bonds -- 5-year, 10-year, 15-year and 20-year, are being traded in the market.
The central bank earlier selected 15 PDs -- 12 banks and three non-banking financial institutions (NBFIs) -- to deal with the government-approved securities in the secondary market.
BBN/SSR/AD-20Mar12-9:50 pm (BST)
