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The Ministry of Finance has formulated a new rule to invest in Bangladesh Government Treasury Bond (BGTB) specifying the details on transaction of the instrument in the secondary market, the shares of nominee and other issues.
The ministry on April 11 issued pre-publication of a gazette on 'The Bangladesh Government Treasury Bond Rule-2021', giving 30 days of time to the stakeholders for their opinion.
A senior official of the Bangladesh Bank said the new rule would help the central bank to know the actual process of selling T-bond in the secondary market.
"There was also no specific direction about nominee of the bond in the previous rules," he said.
In the pre-publication of the gazette, the treasury and debt management wing of the ministry has scrapped two previous rules relating to T-Bond issued on September 10, 2003 and on 24 June 2007.
Bangladesh Government Treasury Bond Rules-2003 and another policy on the T-bond have been updated with the new rules, said a finance ministry official.
There will be an automated system on sales and purchase of the instrument from now on.
The BB official said they will issue specific guidelines on the basis of the latest rules to ensure smooth transaction of the securities.
As per rule, BGTB could be purchased and sold in both primary and secondary market in the electronic channel through any scheduled bank or financial organisation.
However, Business Partner Identification (BPID) will be required for investment in the T-bond.
In case of deceased individual investor, nominees will have the ownership of the securities.
The investor will have to specify the share of each of the nominees, in case of having more than one, at the time of opening BPID.
However, the nominee or their shares could be changed any time through submitting written applications.
In case of not having any nominee, the ownership of the T-bond will be inherited by the family members who will have the right to hold the securities until expiry of its tenure or sell in the secondary market.
The BB will preserve the secondary market transfer-related data of the T-bond as subsidiary general ledger or investment portfolio securities under electronic system.
The BB will be able to impose any types of fees, as mentioned in its operational guidelines, to maintain BPID and transfer of ownership of the securities, the rules said.
For over-the-counter (OTC) transaction between non-resident to resident or both the non-resident companies or individuals, the investor will have to complete transaction within next two working days or as per given time of the BB.
In case of any dispute over transaction of the government securities, the issue will be resolved as per guidelines of the BB.
BGTB and T-bills are the major government securities in Bangladesh.
T-Bonds are risk-free fixed coupon bearing debt instrument that have two to 20 years of maturity periods.
The BB maintains fully automated scrip less depository system named Market Infrastructure (MI) Module for this T-bonds.
Primary Dealers (PDs) can place bids in auction of BB for investing in T-bonds. Other commercial banks and non-banking financial institutions, Insurance companies, corporate, individuals, provident fund etc. can also participate in auction through PDs.
The newly issued rules have kept the existing Tk 0.1 million minimum bid amount unchanged.