BM Desk : The 91-day Treasury bill interest rate has risen to a record high. The interest rate on this bill has risen to 12.10 percent, the highest ever, at the most recent auction conducted by Bangladesh Bank.

In just ten days, the interest rate has risen by eighteen basis points, according to Bangladesh Bank. Prior to that, on June 2, this term bill had the second-highest interest rate of 12.02 percent.

These short-term Treasury bills are issued by the government for a set amount of time. Their term typically lasts between 91 and 364 days.

Concerned parties believe that the primary cause of the interest rate increase is the ongoing liquidity problem in the banking industry. Those involved in the banking industry claim that banks are unable to supply the quantity of money that the government desires to collect. Consequently, the government must pay higher interest rates in order to raise funds. The interest rates on Treasury bonds and bills were low even a few months ago. Interest rates have now increased once again as government demand rises and bank investment interest falls.
Interest rates always rise when banks have less liquidity and government demand rises, according to Bangladesh Bank Executive Director and Spokesperson Arif Hossain Khan. It is mostly decided based on demand and supply.

According to a senior executive in a private bank’s treasury department, “Banks are not as interested in investing in treasury bills as they once were. One explanation for this is the requirement to promptly repay the funds borrowed from the repo, which raises the danger of a settlement. However, there is also strain on banks’ liquidity.

The most recent data from Bangladesh Bank indicates that in March of this year, the interest rate on treasury bills fell somewhat. But in April, it rose once more, rising from 101 to 123 basis points. It broke the previous record in June.

The interest rates on 182-day Treasury bills and 364-day bills are currently 12.11 and 12.24 percent, respectively. Because of their minimal risk and fixed interest rates, Treasury notes are regarded as a reasonably safe investment. On the other hand, the maturities of long-term Treasury bonds range from two to twenty years.