Dhaka, Bangladesh (BBN)- Banks have been asked to provide information on both lending and borrowing to the Bangladesh Foreign Exchange Dealers’ Association (BAFEDA) for publishing Dhaka Inter-bank Offered Rate (DIBOR), officials said.
“We’ve asked the commercial banks to submit the date on regular basis to the BAFEDA for announcement of the DIBOR,” a senior official of the Bangladesh Bank (BB), the country’s central bank, told BBN in Dhaka on Tuesday.
The banks publish four tenor rates initially to ensure transparency in the country’s money market, he said, adding that the rates are for overnight, one week, one month and three months.
The central bank of Bangladesh issued a circular in this connection on Tuesday and asked the chief executives and managing directors of all 48 scheduled banks to quote and send their rates by 12 noon everyday to the BAFEDA.
The DIBOR will come into effect from January next year officially as the country’s first benchmark interest rate in the financial market, the BAFEDA said.
“We expect that the DIBOR would be introduced fully from January 1, 2010 and that would be used as benchmark interest rate in the market,” Chairman of the BAFEDA Syed Abu Naser Bukhtear Ahmed said.
The DIBOR is a rate at which the banks will lend to each other for a specific maturity period in the Dhaka market.
It is also fixed every day for reference purpose. It indicates a key interest rate level used for setting rates on loans and floating rates on notes and for calculating cash settlement of derivative instruments of certain interest rates.
In South Asia, India, Sri Lanka and Pakistan have already introduced their benchmark interest rates to help smooth operation of their financial markets.
BBN/SS/SI/AD-23December09-12:20pm (BST)
