Demand for TBs on the increase

‘More confidence in state banks’:

Ramani KANGARAARACHCHI

The demand for treasury bills has shown a considerable increase during the recent past due to several reasons. Many people withdrew their savings in the private sector banks and deposited the amounts in the State banks as they have more confidence in state banks following the collapse of some private banks.

This is the main reason for the increase, Central Bank sources said. The awareness created by the government is another reason but this awareness among the public is still not sufficient.

Manager, Bank of Ceylon, Lake House Branch R.M.S. Nugegoda said that the interest rates for treasury bills at present are very good and they are offered after deducting the taxes. Asked how the Bank of Ceylon encourages customers to purchase treasury bills, he said that the bank generally promotes its fixed deposits (FDs) and only if the customer does not want FDs that the bank proposes to the customers to purchase treasury bills.

On the other hand the banks get the required amount automatically after treasury bills are issued most of the time. The banks can only issue treasury bills to the amount that the Central Bank requires and the dealers do not bid for treasury bills if they cannot fulfil them, he said.

AGM, Treasury, Hatton National Bank (HNB) Nambiya Rooran said that the demand for treasury bills remains almost the same with the HNB, may be because the government doesn’t want to go for higher rate. He said that bids are at a higher rate and subscription is lower for treasury bills at present.

There are eleven primary dealers in the country who bid for treasury bills which includes eight banks and three private companies. The Bank of Ceylon, People’s Bank and National Savings Bank are the three state banks and the other five are private banks.

The Central Bank informs the public and dealers about the availability of treasury bills every Wednesday and they are subscribed on Fridays according to the Central Bank requirement.