Dhaka, Bangladesh (BBN)– The interest rate on 91-Day Treasury Bills (T-bills) dropped at the lowest ebb on Sunday, as commercial banks rushed to offer bids in the auction, bankers said.

The cut off yield, generally known as interest rate, on 91-day T-bills came down to 1.0 per cent on the day from 1.09 per cent of the previous auction, held on May 06.

Earlier on April 17, 2009, the cut off yield was 1.11 per cent, the market operators said.

Bidders offered BDT 14.42 billion against pre-targeted amount of BDT 2.0 billion for the 91-day T-bills of the auctions, according to the result. Of those BDT 13 billion was accepted for the government approved security, it added.

Talking to the BBN, a senior official of the Bangladesh Bank (BB) said the interest on T-bills has been fixed in line with the market demand.

He also said the yield will come down below 0.45 per cent on the 91-day T-bills if the government keeps borrowing within the target, announced by the BB in its auction calendar.

“Higher borrowing, by the government, helped the yield on 91-day T-bills hover at 1.0 per cent level,” the central banker explained.

Currently, four T-bills are being transacted through auctions to adjust the government’s borrowings from the banking system. The T-bills have 14-day, 91-day, 182-day and 364-day maturity periods.

The T-bills are short-term investment tools issued through auctions, conducted by the central bank on behalf of the government.