Dhaka, Bangladesh (BBN)– The foreign exchange dealers have decided to request member commercial banks to provide data on daily basis for setting the country’s benchmark interest rate for the financial market.
“We’ve decided to advise our 44-member commercial banks to quote DIBOR (Dhaka Inter-bank Offered Rate) rate on daily basis by 11:00am (local time),” Chairman of the Bangladesh Foreign Exchange Dealers’ Association (BAFEDA) Syed Abu Naser Bukhtear told BBN in Dhaka.
The decision was taken at a meeting of the executive committee of BAFEDA, held at its city office on Sunday, he said, adding that the BAFEDA would communicate the decision to all member banks shortly.
Mr Bukhtear, who is also Managing Director and Chief Executive Officer of Agrani Bank Ltd, said the BAFEDA will hold annual general meeting on October 10 this year.
The DIBOR has been introduced for the first time in Bangladesh aiming to ensure transparency in the country’s inter-bank money market from the first week of January this year.
Currently, some commercial banks are providing inter-bank-offered rates to Reuters for publishing each 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 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-28September09-7:15 pm (BST)
