Dhaka, Bangladesh (BBN)- The interest rate on treasury bills (T-bills) dropped significantly on Sunday, as commercial banks rushed to offer bids in the auctions, officials said.
A total 87 bids amounting to BDT 50.91 billion was submitted by the commercial banks for two-type of T-bills on the day against notified amount of only BDT 8.0 billion.
The yield, generally known as interest rate, on 91-day T-bill decreased to 2.41-2.48 per cent on Sunday from 3.49 per cent of the previous auction, held on November 1.
Besides, the yield on 364-day T-bill came down to 3.60-3.76 per cent on the day from 5.40 per cent of the previous auction, held on October 25.
Total 41 bids of BDT 30.99 billion for 91-Day T-bills and 46 bids of BDT 19.92 billion for 364-Day T-bills were offered.
Of those, four bids of BDT 5.0 billion for 91-Day T-bills and four bids of BDT 3.0 billion for 364-Day T-bills were accepted, the central bank said in a statement.
The demand for such securities has sharply risen mainly due to lower interest rates on call money in the interbank market that has forced the banks to invest in such securities, a senior treasury official explained.
“We’ve quoted to lower interest rates on the government approved securities to invest our excess liquidity that helps to minimise our cost of funds,” the treasury official noted.
Currently, three T-bills are being transacted through auctions to adjust to the government borrowings from the banking system.
The T-bills have 91-day, 182-day and 364-day maturity periods.