Five newly-established commercial banks on Sunday got listed with the central bank as primary dealers of the government securities, said officials of the Bangladesh Bank.
The five banks are NRB Commercial Bank, South Bangla Agriculture and Commerce Bank, Midland Bank, Farmers Bank and Meghna Bank.The banks participated in an auction of the government securities on Sunday for the first time.
The five banks, however, had sought six more months before their enlistment as PD banks, but the central bank had rejected their pleas, the BB officials said.
The central bank in November at one-to-one meetings with the five banks asked them to take preparations to act as PD banks.
The BB recently gave licences to nine new commercial banks on condition that they would have to act as PD banks.
Union Bank, one of the nine banks, will not play as a PD bank as it later converted its business to Islamic banking from traditional banking, a BB official told New Age.
He said three other newly-established banks would not be able to act as PD banks right now as they were yet to begin collecting deposit from clients, he said.
The three banks are Midland Bank, NRB Bank and NRB Global Bank.
Before the listing of the five new banks, there were 15 PDs — twelve scheduled banks and three non-bank financial institutions.
The 15 PDs are Sonali Bank, Janata Bank, Agrani Bank, NCC Bank, Uttara Bank, Southeast Bank, Prime Bank, National Bank, AB Bank, Mercantile Bank, Mutual Trust Bank, Jamuna Bank, IPDC, LankaBangla Finance and ILFSL.
The BB official said that the central bank had relaxed the rules of investment in the government securities for the new banks.
The central bank set Tk 1 crore for a new bank to invest in the government securities on a mandatory basis in each auction.
The five new banks have to purchase the government securities if the bids for an auction from the 12 PD banks and three NBFIs fail to meet government demand, he said.
As per the BB regulation, treasury bills and T-bonds are devolved on PD and non-PD banks if PD banks fail to acquire the entire securities put in an auction, he said.
Under the process, 60 per cent of the unsold securities are distributed to PD banks and the rest 40 per cent to non-PD banks.
The BB official said that the new banks would face difficult situation due to lower deposit collection by them if the existing rules for distribution of the government securities would be imposed on them.
So, the BB has decided to set minimum Tk 1 crore for the new banks to invest in T-bills and T-bonds in an auction if the government securities put in the sales need to be devolved, he said.
‘For this reason, the five new PD banks have not purchased any securities today [Sunday] as there was no securities to be devolved,’ he said.
The BB usually holds 12 to 14 auctions for government securities in a month to facilitate government borrowing, he said.
The central bank official said that the new banks would not face crisis right now as PD banks and non-PD banks were now submitting sufficient bids in the auctions.
The majority of the banks are now enjoying enough liquidity due to a stagnant investment situation in the country amid political unrest and they have been purchasing government securities in the last few months to use their idle fund, he added.
-With New Age input
