Dhaka, Bangladesh (BBN) – The interest rates on 91-Day Treasury Bills (T-bills) dropped further on Sunday because of the increasing demand for the government securities, bankers said.
The demand for such securities has sharply risen mainly due to lower interest rates on call money in the interbank market that has forced banks and financial institutions to invest in such securities.

The yield, generally known as interest rate, on 91-day T-bill fell to the range of 2.29-2.49 per cent on the day from 2.70-2.79 per cent of the previous auction, held on January 25 last.

“Most of the banks are now interested to invest their excess liquidity in the government-approved securities for taking more gain because of the low interest rates on call money in the inter-bank market,” a treasury official of a private commercial bank explained.

The call money rate mainly ranged between 2.0 per cent and 4.50 per cent on the day unchanged from the previous level. But most of the deals were settled at rates between 2.50 per cent and 3.00 per cent on the day.

Non-acceptance of reverse repurchase agreement (repo) by the central bank since November 26 last also contributed to the decline in call rate, market operators said.

“We’re giving a signal to the commercial banks to expand their credit to the productive sectors at a lower interest rate,” a senior official of the Bangladesh Bank told BBN in Dhaka while explaining the main reason behind the falling interest rates on securities.

Currently, three T-bills are being transacted through auctions to adjust the government 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 – 5-year, 10-year, 15-year and 20-year –are being traded in the markets.