Bangladesh Bank (BB) has decided to buy treasury bills and bonds from banks and non-banking financial institutions (NBFIs) to prevent any possible liquidity crisis during the ongoing coronavirus pandemic.
The central bank on Sunday issued a circular in this regard.
BB took the decision so that banks and financial institutions could manage their liquidity situation during the crisis moment caused by the deadly coronavirus, it said.
As per the circular, banks and financial institutions could sell their surplus securities (treasury bills and bonds) at market rates to the Bangladesh Bank maintaining their mandatory statutory liquidity ratio (SLR).
“Now the banks excess liquidity stand at around Tk1,05,000 crore in the forms of treasury bills and bonds after holding their SLR. Banks get interest from government against their treasury bills and bonds,” said a high official of the BB.
He said under the current circumstances, the pressure of cash withdrawal already intensified in the banking sector.
To tackle the situation, Bangladesh Bank took initiative to inject fresh fund through purchasing government securities directly from banks, he added.
Currently, the BB issues four types of treasury bills (T-bills), also known as short-term investment tools, through auctions to adjust the government's borrowings from the banking sector.
The T-bills have 14-day, 91-day, 182-day and 364-day maturity periods.
Furthermore, five government bonds with tenures of 2, 5, 10, 15 and 20 years respectively are traded on the market.
Earlier, a directive of the BB asked banks to ensure enough cash at their branches so that the cash supply was not disrupted at this crisis moment.
Even if any area or region is locked down to combat Coronavirus spread, banks must ensure cash supply with the assistance of local administration, it added.
