• Up to 500 dead in South Sudan clashes: UN
  • Joint Force nabs 43 on sabotage charges in Feni, Patgram
  • Blockade underway amid stray incidents
  • Protect migrant workers in Gulf: HRW to SAARC
  • Khoka’s bail, remand pleas rejected
  • Second worst year for journalists in jail: watchdog
  • 8 to die on Biswajit murder charge
  • Gazipur arson victim dies
  • Indictment hearing of Adilur, Elan defers again
  • Transport owners asked to resume inter-city operations from Friday
  • Ganajagaran Mancha lays siege to Pakistan mission in Dhaka
  • Surge in journalist abductions in 2013: RSF
  • Myanmar opium production highest in over a decade: UN
  • Dhaka insists Islamabad withdraws resolution
  • President to donate corneas posthumously
  • Banks to remain open on Friday
  • Fire ravages police station in Khagrachhari
  • PM strongly condemns Pak resolution
  • Discussion about 11th JS polls false: BNP
HOME  BUSINESS
  
Print Friendly and PDF

POLITICAL UNREST

Idle fund forces banks to rush for govt securities

AKM Zamir Uddin

Scheduled banks with huge idle fund continue to submit a large number of bids in the auction of treasury bills and T-bonds with a view to invest their fund although the government do not accept any bid excluding the auction calendar, said officials of Bangladesh Bank.
According to the BB data, the banks submitted bids worth Tk 4,816 crore on Monday against the government scheduled bids worth Tk 1,600 crore for 182-day and 91-day T-bills.
The banks on December 2 submitted bids worth Tk 7,368 crore against the government scheduled bids worth Tk 1,550 crore for 364-day and 91-day T-bills.
A BB official told New Age that the scheduled banks were now availing Tk 22,000 to Tk 25,000 crore in every working day to operate their treasury activities, but the amount were not used due to a lower loan demand from the private sector amid the ongoing political unrest.
He said that the primary dealers and non-PD banks had recently increased their bid submissions in the auction of government securities, but the bid submission figure was remarkably high in the recent period.
The banks are now holding huge amount of liquidity due to a lower demand from the private sector resulting that they have to go to participate in the auction of the government securities to invest their idle fund, the official said.
The banks are failing to avail their cost of fund which was invested in government securities due to a lower rate of interest ranging 7.69 per cent to 12.33 per cent of the government securities, he said.
The increased trend in submitting bids in the T-bills and T-bonds will continue in the months to come if the existing political unrest continues, he said.
Due to the political unrest, the businesspeople have adopted a ‘wait and see’ approach to expand their business by taking bank loans which pushed up idle fund in the banking sector, he said.
The credit growth in the private sector declined to 11.07 per cent in September compared with that of 19.88 per cent in the corresponding month of last year.
Another BB official said that the government had not needed much borrowing right now from the banking sector which created another problem for the over-liquidated banks.
As per the auction calendar of the T-bills and T-bonds, the government earlier set a target to take borrowing from the banks amounting to Tk 9,200 crore in December, he said.
But, the government has declined the borrowing target to Tk 7,800 crore for this month which put an adverse impact on the over-liquidated banks, he said.
As per the auction calendar of the securities, the government borrowed Tk 9,700 crore in November, Tk 5,600 crore in October and Tk 6,100 crore in September.
The BB data showed that the banks had submitted bids worth Tk 2,683 crore and Tk 2,590 crore for 91-day and 364-day T-bills on November 25 against government scheduled bids worth Tk 1,100 crore and Tk 1,300 crore respectively.
The government organised eight auctions for T-bills and four for T-bonds in November and the banks submitted huge amount of bids in every auction than the scheduled target of the government.
The BB official said that the interest rate on the government securities had recently been decreased as the banks are submitting huge number of bids against the T-bills and T-bonds.
Due to the lower rate of interest on the government securities, the banks will fail to recover their cost of fund as they usually collect fixed and term deposit with higher interest rate between 10 per cent and 12.5 per cent.
The BB data showed that the rate of interest rate on 91-day and 364-day T-bill had declined to 7.69 per cent and 9.85 per cent respectively on December 1, 2013 from 9.16 per cent and 11.04 per cent respectively in December 2012.
The rate of interest on 182-day T-bills also declined to 8.49 per cent in December 2013 from 11.07 per cent in December 2012.
The rate of interest on T-bonds, however, did not change much as the banks are reluctant to invest in the bond as the maturity period of the securities is long between 2 years and 20 years.




Reader’s Comment

comments powered by Disqus
   

Idle fund forces banks to rush for govt securities

Scheduled banks with huge idle fund continue to submit a large number of bids in the auction of treasury bills and T-bonds with a view to invest their fund although the government do not accept any bid excluding the... Full story

Export-import through land ports in tatters amid blockade

A file photo shows trucks are stranded on way to Sona Masjid land port in Chapainawabganj recently amid suspension of trades through the port following a road blockade programme called by the opposition alliance. Export-import with the neighbouring countries, mostly with India, through land ports and land customs stations remained almost suspended due to ongoing political unrest. — Focusbangla photo
Export-import business with neighboring countries, mostly with India, through land ports and land customs stations remained almost suspended due to ongoing political unrest, particularly frequent spells of nonstop blockades and... Full story

Banks to give farmers agri loan for producing 31 types of seeds

A file photo shows paddy on a yard on the outskirts of Dhaka. Bangladesh Bank has made a decision to disburse short-term agriculture loans to produce 31 types of seed at the farmers’ level. — New Age photo
Bangladesh Bank has taken a decision to disburse short-term agriculture loans to produce 31 types of seeds at the farmers̢۪ level, avoiding the seeds production companies, said officials of the central bank. Full story

Manpower export fine despite blockade: minister

Labour and expatriates̢۪ welfare minister Khandaker Mosharraf Hossain on Tuesday said that ongoing political turmoil like hartals and blockades sponsored by BNP-led opposition alliance has not affected the manpower... Full story

CVO Petro, 2 other cos downgraded to junk category

Dhaka Stock Exchange on Tuesday downgraded three companies — CVO Petrochemical Refinery, Rahima Food and Modern Dyeing and Screen Printing — to ‘Z’ category as they were not in continuous operation of their productions for more than six months. Full story

Outsourcing service providers to pay 10pc tax on commission, profit

The National Board of Revenue has decided to deduct advance income tax on commission or profit of outsourcing service providing companies that they get for supplying manpower to different organisations, officials of the NBR said. Full story

Political unrest sends stocks to negative for third day

Dhaka stocks inched down on Tuesday, third trading session in a raw, with increased turnover due to decline in most of the traded large capitalized company shares amid rising political violence across the country. Full story

Philippines sees high economic growth despite typhoon

The Philippine economy should grow 7.0 per cent this year and between 6.5 and 7.5 per cent next year despite the devastation caused by a killer typhoon and an earthquake, the government said Tuesday. Full story

Tesco applies to set up shop in India

Britain̢۪s Tesco said Tuesday it had applied to open supermarkets in India, becoming the first retail giant to try to enter the market since New Delhi removed foreign investment barriers last year. The world̢۪s third largest retailer has... Full story

GP internet users get free Wikipedia

Grameenphone customers can now enjoy access to Wikipedia, the largest free online encyclopaedia in the world, free of mobile data charges, said a news release. Beginning on Tuesday, any Grameenphone user... Full story

ICB declares 40pc cash dividend

Investment Corporation of Bangladesh has declared 40 per cent cash dividend for its shareholders for the year ending June 30, 2013. The declaration came in an extraordinary meeting and 37th annual... Full story

Facebook to launch ad clips: report

Social networking site Facebook is to launch this week advertising clips on users̢۪ news feeds, the Wall Street Journal web site reported on Tuesday. The newspaper, quoting an anonymous source close to the matter, said that the clips would be triggered... Full story

Dollar steady in Asia ahead of Fed meeting

The dollar held steady in Asia Tuesday ahead of a key US Federal Reserve policy meeting, while the euro won support from upbeat business activity data for the embattled eurozone. The greenback fetched 103.00... Full story

Market Disclosures

Familytex (BD) Limited Trading of the shares of the company will be allowed only in the spot market and block/odd lot transactions will also be settled as per Spot settlement cycle from today to 01.01.2014. Trading of the shares... Full story
  • Online Poll


    Do you think that the government has successfully brought back normalcy in public life after the January 5 elections?

    • Yes
    • No
    • No comment
    Ajax Loader