The banks and
financial institutions flush with liquidity applied aggressively for the Rs 3
billion worth development bond issued by the central bank on Thursday.
The central bank has received Rs 26.44 billion
worth applications – over eight times – of which banks and financial
institutions applied for Rs 23.02 billion worth development bonds, Citizens Investment Trust (CIT) for Rs 1
billion and Employees Provident Fund (EPF) for Rs 900 million worth bonds.
Of the total
issue, 70 per cent is for competitive bidding for the interest rate for the
first time as a policy departure. The central bank received some Rs 24.02 billion
worth application under the category, whereas under the non-competitive
category, it received Rs 2.42 billion worth application.
Banks and
financial institutions and CIT applied for the bonds under competitive bidding,
whereas EPF and general public applied under non-competitive bidding.
After
receiving the applications, the central bank has fixed 3.25 per cent interest
rate under competitive bidding. The highest rate quoted by the bidders was 9.5
per cent and the lowest one per cent.
According to
the central bank, the rate was fixed on the basis of bidders' quoted rates from
lowest in as ascending order. The same interest rate will be applicable for applicants
under non-competition category too.
The central bank is
planning to allot the bonds, within a week, on November 21.
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