Dhaka, Bangladesh (BBN)- Dhaka Inter-bank Offered Rate (DIBOR) will come into effect from January next year officially as the country’s first benchmark interest rate in the financial market, treasury officials 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 Bangladesh Foreign Exchange Dealers’ Association (BAFEDA) Syed Abu Naser Bukhtear Ahmed told BBN in Dhaka.
He also said the BAFEDA will start collection of data from 44 member banks from November this year and these will be published through its website within half-an-hour after calculation of the DIBOR rate.
Currently, an 11-member technical committee, headed by Head of Global Markets of HSBC Limited, Bangladesh Tarique Islam Khan, of the BAFADA is working to finalise the code of conduct for operating the DIBOR.
“This is a very big and important step for development of the financial market in the country,” Mr. Khan said, adding: “It will open door for us to introduce more financial products for our customers.”
A workshop is scheduled to be held at a local hotel on October 25 to discuss different aspects of the DIBOR and chief executive officials and treasury heads of the commercial banks will attend the workshop, organizers said.
Currently, around 20 commercial banks are providing their inter-bank-offered rates to Reuters for publishing on every working day, a treasury official said.
Under the DIBOR, the banks publish five tenor rates initially to ensure transparency in the country’s money market, he said, adding that the rates are for overnight, one week, two weeks, one month and three months.
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-22October09-1:33 pm (BST)