Treasury bills and bonds, through which the government borrows money, are now available for purchase on the stock market, with interest accumulating as well.
Beginning on Monday, October 10, trading in government securities will begin on stock exchanges in an effort to familiarize regular investors with dealing with these treasury bonds and bills.
At the moment, Bangladesh Bank operates a number of channels through which government treasury bills and bonds are traded. The general public also has the option to purchase government bonds by creating a "security account" with any bank in the country.
The minimum investment amount for this bond should be one lakh taka, or its multiple.
However, when it comes to transactions on the stock market, this cap will not be applicable.
The interest is paid at maturity when purchasing bills and bonds, according to a Bangladesh Bank official who spoke to the Dhaka Tribune on condition of anonymity.
The same thing will occur while investing in the stock market, and the price may increase somewhat if there is greater demand.
In response to a question about how the sale would commence on the stock market on Monday, he stated that now anybody can purchase bills and bonds from people who have bought bills and bonds in the past and if they want to sell them.
But auctions are held every week, after which there will be opportunities to get bills and bonds in the market.
The government has various term bonds and bills to borrow money and at present, the maximum interest on bill bonds is up to 9%,” the official added.
Stock investors were demanding for a long time to make government bonds and bills tradable so that they can get a new product.
However, that did not come about for a number of reasons but finally its starts on October 10.
Market worth
Until August this year, 222 government treasury bonds were listed at Dhaka Stock Exchange valuing Tk593,59 crore or $6.2 billion.
Those were listed with the premier bourse of the country between 2005 and 2011.
Total market capitalization amounted to Tk59,831 crore as of August this year, according to the DSE data.
But those were not traded like shares and mutual fund units as there was no secondary market.
There are around 270 treasury bonds worth more than Tk2.5 lakh crore with their tenures ranging from two to 20 years, data from the central bank showed.
Stock investors were demanding for a while to make government bonds and bills tradable so that they can get a new product.
Bangladesh Bank
Earlier last week Governor Abdur Rouf Talukder said that the government treasury bill and bond trading will be launched on a trial basis next week. If the bond market improves, the defaulted loans in the bank sector will decrease, and the capital market will also improve.
On August 6, Bangladesh Bank issued a circular regarding this issue.
Bangladesh Bank said that government treasury bonds and bills were now already traded at ‘Over the Counter’ (OTC) and ‘Anonymous Order Matching’ trading platforms.
To facilitate the participation of general investors in trading treasury bonds and bills, the exchanges would be allowed on the Dhaka Stock Exchange and Chittagong Stock Exchange trading platforms on a trial basis.
This is going to end a wait of more than a decade and offer one more investment tool to retail investors who are reliant on only shares and mutual funds.