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The central bank has asked the primary dealer (PD) banks to prepare for the buyback arrangement of the government securities (G-Sec) from the upcoming fiscal year (FY 2025-26).
The instruction came at a quarterly tripartite meeting held at the Bangladesh Bank (BB) headquarters in Dhaka on Wednesday, with Istequemal Hussain, Director at the Debt Management Department of BB, in the chair.
Representatives from all the PD banks and the Ministry of Finance were present at the meeting that reviewed the overall market situation.
"We've planned to start the buyback arrangement of the government securities and bonds from FY '26 for effectively managing liquidity," a senior official at the BB told The Financial Express (FE) after the meeting.
He expected the arrangement to help keep the government maturity profile smooth.
"We'll provide training to the bankers in this connection, if necessary," the central banker said without elaborating.
Currently, four treasury bills (T-bills) are transacted through auction to adjust government borrowings from the banking system. The T-bills have 14-day, 91-day, 182-day and 364-day maturity periods.
Furthermore, five government bonds, with tenures of two, five, 10, 15 and 20 years respectively, are traded on the market.
At the meeting, the senior officials of the PD banks sought fresh liquidity support from the central bank after phasing out their assured liquidity support (ALS) to manage funds efficiently.
"We've discussed some operational issues including auto settlement of repo facilities," a senior treasury official at a PD bank told the FE while replying to a query.
The central bankers informed the meeting that the BB is considering introducing intra-day liquidity facility (ILF) from July, 2025 to facilitate the banks manage their liquidity properly.
The central bank earlier selected 24 PDs to manage the government-approved securities in the secondary market.
A PD will be eligible for liquidity support from the BB for its operations, collateralised by treasury bills and government securities from its own positions, through the repo mechanism or such other arrangements, as the BB may prescribe from time to time.
A PD will be entitled to an underwriting commission on the issues of dated government securities underwritten by it, at rates prescribed by the government from time to time.
The PDs will subscribe and underwrite primary issues and make secondary trading deals with two-way price quotations.
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