Proper fund management

PD banks for six-month tenure auction calendar

Siddique Islam | Published: November 27, 2018 14:29:55 | Updated: November 28, 2018 10:53:48

Picture used for illustrative purpose — Collected

The primary dealer (PD) banks have sought introduction of a six-month tenure auction calendar instead of the existing single-month one to manage fund efficiently.

The appeal was made at a review meeting, held at Bangladesh Bank (BB) headquarters in Dhaka on Monday, with BB General Manager Md. Khurshid Alam in the chair.

They also urged Ministry of Finance (MoF) to ensure regular auction of the government treasury bills (T-bills) and bonds to facilitate development of the securities market.

MoF Deputy Secretary Md. Firoz Ahmed attended the meeting as a representative of the ministry.

"We've sought a written proposal from the PD banks in this connection," the MoF official told the FE after the meeting.

He also said MoF and BB are now working jointly to develop a vibrant bond market in near future.

At the meeting, different issues related to the development of bond market, possibility of issuing diaspora bond in foreign currency, and the government securities were discussed.

"We need a six-month tenure auction calendar for managing fund properly," a senior official of a PD bank told the FE while explaining its necessity.

He also said most of the banks, particularly the PD ones, face difficulties when auction of both T-bills and bonds is suspended in a short notice.

"We've also sought standing liquidity support along with the existing assured liquidity support to ensure supply of required liquidities of the PD banks," the senior treasury official noted.

The PD bank officials also suggested taking a tripartite initiative among BB, Dhaka Stock Exchange (DSE) and Bangladesh Securities and Exchange Commission (BSEC) to develop corporate bond market, the meeting sources said.

They also said the central bank is now working with DSE and BSEC on the issue.

The supply of both T-bills and bonds should be increased shortly to bring dynamism in the country's securities market, they added.

When contacted, a senior member of Primary Dealers Bangladesh Limited (PDBL) said the issues will be discussed at a meeting of PDBL executive committee, scheduled to be held today (Tuesday).

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

Also, five government bonds with tenures of two, five, 10, 15 and 20 years respectively are traded on the market.

BB earlier selected 21 PDs to manage the government-approved securities in the secondary market.

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