Written by The Banking Post
Yields on treasury bills declined further on Sunday as banks continued to channel excess liquidity into risk-free government securities amid muted private-sector credit demand ahead of the national polls.
The cut-off yield on the 91-day treasury bills dropped to 10.14 per cent from 10.42 per cent at the previous auction. The 182-day bills saw their yield ease to 10.25 per cent from 10.55 per cent, while the 364-day bills fell to 10.34 per cent from 10.66 per cent, according to auction results.
The government raised Tk 80 billion through the issuance of the three tenors to partially finance its budget deficit.
A similar downward trend in yields was observed earlier this month as banks showed strong appetite for government securities under the same market conditions.
“Most banks are keen to invest their excess liquidity in government securities as private-sector credit demand remains subdued ahead of the upcoming national election,” a senior central bank official said.
Private-sector credit growth stood at 6.58 per cent year-on-year in November 2025, up slightly from 6.23 per cent in the previous month, but still well below historical averages, central bank data show.
Officials said higher remittance inflows, along with the central bank’s purchase of US dollars from the banking system, have boosted liquidity, putting further downward pressure on yields. Since July 13 last year, the central bank has bought $3.75 billion directly from banks under the prevailing free-floating exchange rate regime.
The official expects the softening trend in yields on government securities to continue in the coming weeks if current conditions persist.
At present, four treasury bills—14-day, 91-day, 182-day and 364-day—are issued through auctions to manage government borrowing from the banking system. In addition, five government bonds with maturities of two, five, 10, 15 and 20 years are actively traded in the market.
