The net investment in treasury bills rose significantly by 81.15 per cent to Tk 46,656 crore in FY23, compared year-on-year to Tk 25,755 crore recorded in FY22. This amount is the highest ever posted in the last five financial years.
According to Bangladesh Bank latest data, the treasury bill net investment was negative Tk 11,514 crore in FY21, Tk 18,707 crore positive for FY20 and Tk 17,731 crore was in FY19.
Based on this data, experts and bankers believe that the banks heavily invested on Treasury bills last FY to make quick profits, while the 9 per cent interest cap was imposed on loans.
Speaking to The Business Post, Dhaka Bank Managing Director and CEO Emranul Haque said, “Banks invest their excess liquidity in Treasury bills and bonds. They invest in T-Bills for short-term to make profits.
“Even Dhaka Bank is investing money in T-bills and bonds. On the other hand, a bank always considers investing money where it will be secure, and T-bill is a secure place.”
Bangladesh Bank data shows that the total investment in treasury-bills was Tk 2,35,574 crore in FY23. The amount of repayment was Tk 1,88,917 crore in the same FY, as net investment was Tk 46,656 crore.
Besides, the total investment in treasury bills was Tk 1,34,681 crore in FY22 and the repaid amount was Tk 1,08,926 crore, so the net investment was Tk 25,755 crore.
Senior central bank officials, on condition of anonymity, said, “Banks think about profits. Banks invest in T-bills for shorter terms, such as 91 days, 182 days, and 364 days. Banks always want to invest somewhere where they will make profits.
“Besides, the banks are struggling due to non-performing loans (NPL), and the liquidity crisis. So banks increased their investments in T-bill.”
Preferring to be anonymous, the managing director of a private bank said, “Many people took money from the banks, but the problem is they did not get back the money in a timely manner.
“As a result, the country's banks have been suffering for many years. Sometimes a bank’s management faces pressure from the bank's board to lend money. Defaulters are influential and most of the time these people influence the executive directors of banks.”
So, currently, banks are investing in treasury-bills for getting profits in the short term, he added.
The total investment in treasury bills was Tk 90,493 crore in FY19, repayment was Tk 72,762 crore. Besides, the total investment in treasury bills was Tk 1,45,303 crore in FY20. During that time, the repayment amount was Tk 1,26,596 crore.
As evident from the chart, after a decline in FY21, there is an increasing trend of the net issuance of T-Bills.
In FY23, the net issuance of 91-days T-Bills declined, while 182-days and 364-days T-Bills increased compared to the previous year. Overall, the net issuance of T-bills in FY23 was 81.16 per cent higher than that of the previous FY.
Net Issuance of govt investment Sukuk
The government has not issued any new Sukuk in FY23. It should be noted that the first ever Bangladesh Government Investment Sukuk worth Tk 8,000 crore was issued on December 28, 2020.
On December 30, 2021, the government issued its 2nd Sukuk for raising Tk 5,000 crore to fund the “Development of Infrastructure in Government Primary Schools” Project.
It is an Ijarah (lease) Sukuk based on the Ijarah contract. In the first half of 2022, the government issued its 3rd Sukuk which was based on Istisna'a (manufacturing) and Ijarah (lease) contracts.
