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Yields on treasury bills (T-bills) declined further on Sunday as banks continued to channel their surplus liquidity into government securities, amid sluggish private-sector credit growth in the run-up to the national elections.
The cut-off yield, commonly known as the interest rate, on the 91-day T-bills fell to 9.44 per cent, down from 9.51 per cent in the previous auction.
The yield on 182-day T-bills dropped to 9.63 per cent from 9.71 per cent, while the 364-day T-bills saw a decline to 9.54 per cent from 9.60 per cent, according to the auction results.
The government raised Tk 75 billion through the issuance of the three types of T-bills to partially finance its budget deficit.
"Most banks have been channelling their excess funds into risk-free government securities due to sluggish private sector credit demand ahead of the general election," a senior official of Bangladesh Bank (BB) told The Financial Express, explaining the current market situation.
Private sector credit growth slowed to 6.35 per cent year-on-year in August 2025, down from 6.52 per cent a month earlier, reflecting weaker business sentiment and tighter lending conditions.
The BB official added that higher deposit growth in the banking system has also contributed to the downward pressure on T-bill yields. Aggregate deposit growth rose to 10.01 per cent in August 2025, from 8.42 per cent in July, according to central bank data.
The official anticipated that the current trend of falling yields on government securities could persist in the coming weeks.
Currently, four types of T-bills - with maturities of 14, 91, 182, and 364 days - are auctioned to manage government borrowing from the banking system.
In addition, five government bonds with tenures of two, five, 10, 15, and 20 years are traded in the market.
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