Dhaka, Bangladesh (BBN)- A move has been taken to reintroduce the 28-day treasury bills (T-bill) so that the government can go for more short-term borrowing from the banking system than the long-term one, officials said.
"We've advised the government to reintroduce the short-term T-bills," a senior official of the Bangladesh Bank (BB) said, adding that the issue would be discussed in the next meeting, scheduled to be held in September, of the Cash and Debt Management Committee (CDMC).
"We've taken the move in line with the bankers' recommendations," the central bank official said. The bankers are interested to invest their funds in short-term T-bills than long-term bonds.
The government suspended the auction of 28-day T-bills in the fiscal year (FY) 2008-09 as the short-term T-bills were overlapping the 30-day Bangladesh Bank (BB) bills.
Bankers, however, opposed the government's decision on suspension of the 28-day T-bills, saying that there is a difference between the 28-day T-bills and the 30-day BB bills.
"The 28-day T-bill is a fiscal instrument but the 30-day BB bill is a monetary instrument," a senior member of the Primary Dealers Bangladesh Limited (PDBL) said, adding that the PDBL earlier urged the central bank to take effective measures to reintroduce the 28-day T-bills for creating a new window of short-term investment for commercial banks.
"The banks will be able to invest their very short-term fund in the short-term securities if the government allows reintroduction of the 28-day T-bills," the banker explained.
"The ministry of finance (MoF) is now scrutinising the proposal on 28-day T-bills," another BB official said. The MoF would take a decision after examining the proposal properly, he added.
Currently, auction of three types of T-bills is being held to adjust the government's borrowings from the banking system.
The T-bills have 91-day, 182-day and 364-day maturity periods.
On the other hand, four government bonds having the 5-year, 10-year, 15-year and 20-year tenures are being traded in the market.
BBN/SSR/AD-15July13-10:48 am (BST)
