Government securities are issued on behalf of the government. As a part of the government’s debt manager, the Debt Management Department of Bangladesh Bank is responsible for providing functional and advisory services to the government on matters related to government’s debt management policy and the issuance of various treasury instruments as per Bangladesh Bank Order 1972, article 20 and Treasury Rules 1998 (Appendix 1, Section 3).

Government securities market in Bangladesh consists of tradable and non-tradable securities. The tradable securities are tradable in the secondary market and include treasury bills and treasury bonds.

• a) Treasury Bills: Treasury bills are short-term, money market instruments of the government, which qualify as being credit risk-free and tradable in the secondary market. Treasury bills with maturities of 91-day, 182-day, and 364-day are available in Bangladesh. These securities are issued in scripless form at a discount and are redeemed at face value at maturity. Treasury bills are also known as T-bills.
• b) Treasury Bonds: Tradable government securities with maturities of more than one year are called treasury bonds. Treasury bonds in Bangladesh are also known as Bangladesh Government Treasury Bonds (BGTB). BGTBs can have maturities of 2-year, 5-year, 10-year, 15-year, and 20-year.

• Individuals and institutional residents in Bangladesh, such as:
  • Banks
  • Non-Bank Financial Institutions
  • Insurance Companies
  • Corporate Bodies
  • Authorities responsible for the management of provident funds, pension funds, etc.
• Foreigners
• Non-residents

Foreigners/non-residents can invest in BGTBs only, but not in T-bills.

The purchase value of bonds shall be paid from the investors fund in Non-resident Foreign Currency Account and in Non-resident Investors Taka Account (NITA) maintained with a bank in Bangladesh. Coupon payments and resale/redemption proceeds are freely transferrable abroad in foreign currency after deduction of applicable taxes. Bonds purchased by a non-resident may freely be resold anytime (no lock in period) to any resident or non-resident.

Tradable government securities are issued through auctions. Auction calendar is published periodically by Bangladesh Bank with the approval of Ministry of Finance. Auction notice is provided as per auction calendar.

Weekly auctions of T-bills (usually on Sunday) and BGTB (usually on Tuesday) of a particular tenor are held regularly following a pre-announced auction calendar for a specified amount.

Bidders quote their acceptable price/yield. The auction committee determines the cut-off price/yield from the offered yields.

Upcoming auction details are updated in the following url: https://www.bb.org.bd/monetaryactivity/auc_calendar.php

Auctions can be yield-based or price-based.

In a yield-based auction, investors bid in yield terms. Bids are arranged in ascending order and the cut-off yield is arrived at the yield corresponding to the notified amount of the auction. Successful bidders are those who have bid at or below the cut-off yield. Bids which are higher than the cut-off yield are rejected.

In a price-based auction, investors bid in terms of price per BDT 100 of face value of the security. Bids are arranged in descending order and the successful bidders are those who have bid at or above the cut-off price.

Auctions of bills are price-based. For bonds, in case of new issue the auction is yield-based and in case of re-issue the auction is price-based.

There are two methods of auction: uniform price auction and multiple price auction.

In a uniform price auction, all the successful bidders are required to pay the allotted quantity of securities at the same rate, i.e., at the auction cut-off rate, irrespective of the rate quoted by them.

On the other hand, in a multiple price auction, the successful bidders are required to pay for the allotted quantity of securities at the respective price/yield at which they have bid. In Bangladesh government securities are auctioned in multiple price auction.

Minimum bid amount is BDT 100,000. Bids can be submitted for an amount of BDT 100,000 and its multiples.

Cut-off yield is the rate at which bids are accepted. Bids at yields higher than the cut-off yield is rejected and those lower than the cut-off are accepted. The cut-off yield is set as the coupon rate for the security. Bidders who have bid at lower than the cut-off yield pay a premium on the security, since the auction is a multiple price auction.

Cut-off price is the minimum price accepted for the security in an auction. Bids at prices lower than the cut-off are rejected and at higher than the cut-off are accepted. Coupon rate for the security remains unchanged. Bidders who have bid at higher than the cut-off price pay a premium on the security, thereby getting a lower yield. Price based auctions lead to finer price discovery than yield based auctions.

Tradable government securities, which have been issued through auction can be traded in the secondary market. Bangladesh Bank has initiated to automate the process of trading and settlement of government securities transactions in October 2011. The secondary market of government securities of Bangladesh is comprised of Over the Counter (OTC) and Trader Work Station (TWS).

No, government securities cannot be encashed before maturity. However, holders of tradable government securities can sell government securities in the secondary market.

An interested investor needs to have a Sub-BP (Sub –Business Partner) ID to invest in tradable government securities. An investor (both individual and corporate) can open Sub-BP ID from Bangladesh Bank through LankaBangla Finance Limited. After opening Sub-BP ID, an investor can participate in government securities auction through LankaBangla Finance Limited and can also buy/sell tradable government securities from/in the secondary market through LankaBangla Finance Limited. If investment is made through LankaBangla Finance Limited, LankaBangla will also transfer the coupon and principal amount collected from Bangladesh Bank to investor’s bank account.

• For Individuals:
  • Photocopy of NID/Passport of Applicant
  • Photocopy of NID/Passport of Nominee
  • Passport-size Photograph of Applicant (2 copies)
  • Passport-size Photograph of Nominee (1 copy)
  • Photocopy of ETIN Certificate
• For Limited Companies:
  • Photocopy of NID/Passport of Signatories
  • Passport size Photograph of Signatories (2 copies each)
  • Photocopy of MoA & AoA
  • Photocopy of Certificate of Incorporation
  • Photocopy of Form XII & Schedule X
  • Photocopy of ETIN Certificate
• For Partnership Concerns:
  • Photocopy of NID/Passport of Signatories
  • Passport size Photograph of Signatories (2 copies each)
  • Resolution
  • Photocopy of Trade License
  • Photocopy of Partnership Deed
  • Photocopy of ETIN Certificate
• For Proprietorships:
  • Photocopy of NID/Passport of Signatory
  • Passport size Photograph of Signatory (2 copies)
  • Photocopy of Trade License
  • Photocopy of ETIN Certificate