Bangladesh Planning To Provide Primary Dealers With More Liquidity

Dhaka, Bangladesh (AHN) - The central bank of Bangladesh is planning to provide liquidity support to primary dealer (PD) banks and a financial institutions to help them deal with the effects of devalued securities.

The Bangladesh Bank (BB), the country's central bank's goal is to provide liquidity support to the PDs in line with their requirements, officials said on Thursday.

"We're now working on the matter and examining the practices of South Asian countries including India and Sri Lanka on providing such liquidity facilities," a BB senior official told AHN.

Currently, the PDs are receiving liquidity support facility against devalued treasury bills and bonds for a maximum period of one month from the date of issue of such securities from the central bank.

Three top-performing PDs out of nine will be selected on the basis of their success ratio and turnover, and they will be entitled to get such facility for a maximum period of two months, they added.

Treasury official at PD banks welcomed the BB's latest move, saying that such liquidity support will help to make the country's secondary securities market more viable.

"We are expecting that the number of successful bids for government-approved securities in the primary auction would increase if the BB provides such liquidity facilities to the PDs," a member of the Primary Dealers Association of Bangladesh (PDAB) told AHN.

Earlier, the central bank of Bangladesh selected nine PDs - eight commercial banks and a non-banking financial institution - to handle government-approved securities.