Eight new commercial banks will have to take part in Bangladesh Bank auction to buy government securities just after starting their operation as the central bank earlier attached a condition that every new bank would be a primary dealer, said BB officials.
The banks, which are among nine banks that got the BB nod recently, will have to purchase the treasury bills and bonds from their paid-up capital at the initial stage, a BB official told New Age on Wednesday.
Union Bank will not participate in the securities auction as the bank was approved by the BB to operate as an Islamic bank.
A number of new banks have already applied to the BB seeking to get released as primary dealers for initial two years arguing that they may fail to attract the depositors for savings in the period.
But, the BB asked the new banks to participate in securities auction on mandatory basis after the start of their operation.
The eight primary dealer banks are Meghna Bank, Farmers Bank, Modhumoti Bank, South Bangla Agriculture and Commerce Bank, Midland Bank, NRB Commercial Bank, NRB Global Bank and NRB Bank.
The NRB Commercial Bank and the South Bangla Agriculture and Commerce Bank of the new banks have recently started their banking operation.
The current 12 PD banks are Sonali Bank, Janata Bank, Agrani Bank, NCC Bank, Uttara Bank, Southeast Bank, Prime Bank, National Bank, AB Bank, Mercantile Bank, Mutual Trust Bank and Jamuna Bank.
The new banks may fall in a difficult situation as they will have to purchase the government securities on mandatory basis before getting time and demand deposit from the clients, the official said.
The BB included the condition for the new banks to facilitate the government borrowing, he said.
Some old primary dealer banks earlier applied to the BB to get them released from the PD list as they were facing severe liquidity crisis, but the central bank did not accept their request.
Another BB official said that every bank would have to purchase the T-bills and T-bonds for maintaining their Statuary Liquidity Ratio against their clients’ deposit.
According to the BB regulation, a conventional bank needs to preserve its 19 per cent clients’ deposit as SLR by purchasing the T-bills and T-bonds of which 6 per cent is required to be preserved as liquid money with the BB’s account.
For this reason, the new banks do not need to purchase the government securities on mandatory basis to preserve their SLR as they have no deposit at the very initial stage, he said.
But the new banks will have to purchase the securities in accordance with the BB’s condition, he said.
The official, however, said the BB was yet to make decision to fix up the underwriting obligation for the
new PD banks to purchase the securities in their initial stage.
South Bangla Agriculture and Commerce Bank managing director Md Rafiqul Islam told New Age that he would discuss the issue with the other new banks after starting of their banking operation.
When asked whether the new banks would apply to the BB to get them released from the PD list, he said, ‘We (new banks) will hold a meeting in this regard to fix our respond to the central bank’s regulation about the PD.’
He said that the BB had recently sent the documents of the rules and regulations about the PD and his bank was now scrutinising the papers.
According to the BB data, the investment of the country’s all banks in the T-bills and the T-bonds was Tk 1,04,875.64 crore as on March 31. The investment by the banks in T-bills and T-bonds was Tk 1,02,617.44 crore as on February 28.
-With New Age input