Dhaka, Bangladesh (BBN) – Primary dealer banks will publish inter-bank offered rates initially through BAFEDA aiming to introduce the Dhaka Inter-bank-Offered Rate (DIBOR).
The decision was taken at a meeting of the executive committee of Bangladesh Foreign Exchange Dealers’ Association (BAFEDA), held at its city office on Sunday with its Chairman Syed Abu Naser Bukhtear Ahmed in the chair.
“We’ve decided to introduce DIBOR shortly to ensure transparency in the inter-bank money market,” the BAFEDA chairman told BBN in the capital, Dhaka.
Meanwhile, a BAFEDA sub-committee recommended that banks be invited to provide indicative rates for introducing the DIBOR as the benchmark interest rate in the country’s financial market.
On September 7 last, the four-member sub-committee was formed to formulate the code of conduct for operating the DIBOR properly, a BAFEDA member said.
The DIBOR is a rate at which banks are prepared to lend to each other for specific maturity period within the Dhaka market.
It is also fixed daily for reference purposes and is a key interest rate level used for setting rates for loans and floating rate notes and for calculating cash settlements of certain interest rate derivative instruments.
In South Asia, India, Pakistan and Sri Lanka have already introduced their benchmark interest rates to operate financial market smoothly.
The National Stock Exchange of India Limited (NSE) had developed and launched the NSE Mumbai Inter-bank Bid Rate (MIBID) and NSE Mumbai Inter-bank offered Rate (MIBOR) for overnight money market on June 15, 1998.
The MIBID or MIBOR rate is used as benchmark rate for majority of deals struck for Interest Rate Swap, Forward Rate Agreements, Floating Rate Debenture and Term Deposits.
Karachi Inter-bank Offered Rate (KIBOR), which has been introduced since 2001, is now being proposed to be used for commercial asset benchmarking.
BBN/SI/SSR/AD-01December08-9:23 AM (BST)