BB to hold Tk5,000cr special repo auction as govt cash demand rises

Bangladesh Bank has called a special
auction for 91-day treasury bills worth Tk5,000 crore as the government's
demand for cash increases towards the end of the fiscal year.
The central bank
has scheduled the auction for 1 April, according to a senior Bangladesh Bank
official who confirmed the development to The Business Standard.
The move comes
after banks, on Sunday, placed about Tk11,500 crore with the central bank
through the Standing Deposit Facility (reverse repo). Based on this, Bangladesh
Bank believes there is currently sufficient liquidity in the market.
A senior Bangladesh Bank official said,
"Usually, the government's demand for funds increases at the end of the
fiscal year. At the moment the government needs money, and since banks have
sufficient liquidity, Bangladesh Bank has called a special auction of 91-day
treasury bills."
Bangladesh
Institute of Bank Management Director General Dr Md Ezazul Islam said,
"The government currently has a need for funds. As the treasury has
limited inflow, it is borrowing from banks through this special auction."
A senior official
of a private bank also told TBS that the government had faced similar funding
pressures earlier in the fiscal year.
"The
government's demand for funds was also high during the October-December
quarter. At that time, it borrowed Tk10,000 crore outside the calendar,"
the official said. "As the government needs funds now and there is ample
liquidity in the market, money will be raised through the auction."
Another senior Bangladesh Bank official noted that the special auction falls
outside the regular treasury auction schedule.
Treasury bill and
bond auctions are usually held on Sundays and Tuesdays each week. Calling a
treasury bill auction on Wednesday in April indicates that the government needs
to borrow money urgently for a specific purpose, the official said.
















