B Mirror Report: In less than a month, Treasury bill yields have decreased once more, indicating more banking sector liquidity and less pressure on government borrowing.
Treasury bill yields decreased 40 to 59 basis points from January at the most recent auction, which took place on February 22. The declines occurred for all three maturities.
On January 5, the yield on 91-day Treasury bills was 10.42 percent; today, it was 10.02 percent. The 182-day bills sold for 10.11 percent at auction, down from 10.54 percent in January. In the meantime, the 364-day bills fell from 10.66 percent to 10.07 percent.
Treasury bills are short-term government securities issued for periods ranging from 91 days to one year.
Md Ezazul Islam, Director General of the Bangladesh Institute of Bank Management, said the decline in yields was mainly driven by two factors.
He explained that Bangladesh Bank has been purchasing foreign exchange reserves from commercial banks through auctions, thereby injecting liquidity into the banking system.
“As the central bank buys dollars from commercial banks, funds are flowing back into the banks, leaving them with ample liquidity,” he said.
According to Bangladesh Bank data, the central bank has purchased $5.39 billion from commercial banks through auctions in the current fiscal year.
Ezazul noted that slower growth in private sector credit is another key reason behind the drop in yields, as banks are now holding surplus funds. Latest central bank data show that private sector credit growth stood at 6.10 percent in December.
A deputy managing director of a private bank said the “massive liquidity” in the banking sector has pushed down treasury bill yields, adding that the central bank’s dollar purchases have significantly increased liquidity in the system.
He also mentioned that bank deposits have risen compared with earlier periods, further strengthening liquidity conditions.
Another senior official of a private bank observed that government borrowing has decreased due to the slow implementation of the Annual Development Programme (ADP).
During the first seven months (July–January) of the current 2025–26 fiscal year, ADP expenditure amounted to Tk50,556.29 crore — the lowest in nine fiscal years. Spending has also dropped sharply compared with the period of political transition and instability last year.
Earlier, in September 2025, treasury bill yields had fallen below 10 percent. At that time, the interest rate on 10-year treasury bonds declined by 246 basis points within three months, marking the first instance in two years that the rate dropped below the 10 percent threshold.
