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The first reverse auction for buy-back of the government securities was held Wednesday at the central bank headquarters in Dhaka without accepting any bids, officials said.
Only three primary dealer (PD) banks out of 20 submitted their bids worth around Tk 80 billion at the auction for selling their excess government securities.
The auction committee, headed by Deputy Governor of the Bangladesh Bank (BB) Abu Hena Mohammad Razee Hassan, did not accept the bids mainly due to insignificant amount, according to the officials.
They also said the committee is yet to fix the date for next auction.
"It was very unfortunate," a senior executive with a PD bank told the FE while expressing his reactions after hearing the result of the auction.
At least three state-owned commercial banks along with a leading private commercial bank are now holding excess securities of the government, the PD bank executive added.
"The banks having excess government securities should take part in the auction through submitting bids for making the new process of buy-back successful," the senior banker explained.
The Ministry of Finance (MoF), the central bank of Bangladesh and the PD banks worked for more than last two years for developing the multiple price-based reserve auction for buying back the government securities.
Market insiders, however, said the holding of excess government securities decreased in the recent months following negative borrowing by the government from the banking system.
The MoF had suspended auctions of the government securities in the months of February this calendar year to ensure proper cash management.
Excess holding of the government securities by 12 leading PD banks came down to Tk 207.73 billion in February 2018 from Tk 223.26 billion in May 2017, the Primary Dealers Bangladesh Limited (PDBL) data showed.
Such buy-back will help the government cut its expenses on interest payments against its securities and also contribute to jacking the secondary market up in Bangladesh, they added.
Currently, four treasury bills (T-bills) are being transacted through auctions to adjust the government's borrowings from the banking system. The T-bills have 14-day, 91-day, 182-day and 364-day maturity periods.
The T-bills are short-term investment tools issued through auctions, conducted by the central bank on behalf of the government.
Furthermore, five government bonds, with tenures of two, five, 10, 15 and 20 years respectively, are traded on the market.
The central bank of Bangladesh had earlier selected 20 PD banks including eight fourth-generation banks to deal in government securities in the secondary market.