Dhaka, Bangladesh (BBN) – The central bank of Bangladesh is likely to revise the underwriting obligations of three state-owned commercial banks (SCBs) in primary auctions of government securities aiming to bringing dynamism in the secondary market.
The Bangladesh Bank (BB), the country’s central bank, officials are scheduled to meet with the chief executive officers of three SCBs -Sonali, Janata and Agrani – that are also functioning as primary dealers (PDs) on Thursday in this connection.
“We will discuss the issue with the chief executives of the SCBs,” a BB senior official told BBN in Dhaka, adding that the central bank would take its final decision after the meeting.
The BB earlier selected nine PDs – eight banks and a non-banking financial institution (NBFI) – to handle government-approved securities in the secondary market.
The central bank has already amended the guidelines for PDs allowing commission and liquidity support to activate the secondary market.
Under the guidelines, each of the bank and non-bank PD will have to underwrite a minimum of 12 per cent and 4.0 per cent of the primary auction amount respectively.
Meanwhile, the country’s secondary securities market has gradually improved as participation of commercial banks and life insurance companies increased.
A total of BDT 24.50 billion was traded on treasury bills (T-bills) and bonds in the secondary securities market in August last, market operators said.
“The functions of secondary market remained operational among banks and life insurance companies only,” a senior treasury official of a PD bank said.
He also said the interest rates on the government securities will have to be revised on market-base to attract general investors for investment in the securities.
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 markets.