BB for releasing savings bond to face fund crisis

Nasir Uddin Ahmed : The Central Bank has recommended to gradually introduce the government sector savings certificates and savings bonds to the bond market. This will increase the supply of versatile and attractive yield instruments in the bond market. At the same time, individuals and institutions investing in savings bonds will be benefited. You can monetize the money by selling the savings in the bond market for any need. At the same time, it has been proposed to bring all the funds including provident funds of various organizations with security, pension funds to the bond market.
This information has been obtained from the report entitled ‘Government Securities Report 2022-23’ published by the Central Bank on Monday. Every year the central bank publishes this report. However, this time the report has been enriched by the terms of the International Monetary Fund (IMF). Various data on government debt have been added. A condition of the IMF loan was to publish a full report on public sector debt on an annual basis. Earlier, the central bank released the annual financial stability report. In this too, a lot of information related to the renewal of defaulted loans has been published.
According to the report, the provision of government loans is still dependent on the banking sector. 62 percent of the total loans are taken from the banking sector.

The IMF recommended reducing government borrowing from the banking sector and borrowing more from individuals and institutions through the bond market. To do this, the government is developing the bond market. Currently, various types of government treasury bills and bonds are being sold in the bond market.
Most of these are sold by banks, financial institutions and insurance companies. Individuals and other corporate institutions are still not investing in this sector. Initiatives have been taken to bring all types of attractive bonds to the market to attract individuals and corporates in this sector. As part of this, public sector savings certificates and savings bonds will be brought to the market. These are not yet traded in the bond market.
Still these savings bonds offer the highest returns on a permanent basis. Besides, there is a government sector guarantee. For these reasons investors have confidence in savings instruments. If these bonds come to the market, the investment will be more. Because then the buyers of savings bonds or savings bonds can monetize money by selling them on an urgent basis. At present they have to go to banks or savings bureaus to sell them before maturity. Selling and withdrawing money is also time consuming. Again, the profit is less. To avoid these problems, they can be easily sold in the bond market. Then the profit will be more. Because the bond market is getting more profit than the declared profit.
Currently various companies can invest in various funds including their provident funds in savings bonds and treasury bonds. A part of these funds can also be brought into the secondary bond market. This will increase the flow of liquidity in the bond market.
According to the report, due to the dollar crisis in the market, the banks have to provide from the central bank reserves. A large part of the liquidity has gone to the central bank. These liquidities are again being returned to the banks through repurchase agreements or repos. Due to this, the trend of repo auctions has increased.