Banks want the bill as there is no tax at source
Bangladesh Bank will propose that the government’s cash and debt management committee should reintroduce the 28-day government Treasury Bill amid demand by scheduled banks, said officials of the central bank. A BB official told New Age on Tuesday that a number of banks had recently requested the central bank to reintroduce the 28-day T-bill as there was no tax at source on the investment of the bill.
On the other hand, the banks now pay 25 per cent to 45 per cent tax at source against their investment of the existing 30-day Bangladesh Bank bill.
Besides, the banks do not count any tax at source on investment in the other T-bills and T-bonds.
Through holding bidding for T-bills, bonds and BB bills, the central bank mops up additional liquidity from market and facilitates government’s bank borrowing.
The BB official said that banks usually prefer short-term bills but due to tax at source they were reluctant to make investments in 30-day BB bill.
He said that the BB held auctions for 28-day T-bill and 90-day BB bill till 2008 but stopped the bidding in the year to avoid overlapping in investment in 30-day BB bill and 91-day T-bill.
The BB recently sent a letter to the finance ministry requesting them to take initiative to reintroduce the 28-day T-bill, he said.
The BB will not invest the money which is obtained from the short-term bills.
Another BB official said that the routine meeting of the CDMC would be held at the last week of this month in which the decision of reintroducing the 28-days T-bill would be taken, he said.
The secretary of finance division is chairman of the CDMC and the high officials of the MoF and the BB act as members of the committee.
If approved, BB will issue the 28-day T-bill to the banks against the government borrowing through the overdraft, he said.
Five government T-bonds, having the tenures of 2-year, 5-year, 10-year, 15-year and 20-year, and three T-bills, having tenure of 91-days, 182-days and 364-days are now being traded in the market.
-With New Age input
