Government securities (G-sec) have become highly attractive to both institutional and individual investors, leading to a significant increase in investments. In the fiscal year 2023-2024, G-sec holdings surged to Tk 5.50 trillion from Tk 4.90 trillion the previous year. Investments by financial institutions rose 210% to Tk 29.35 billion, insurance companies’ investments grew 19% to Tk 397 billion, and corporate investments jumped 217% to Tk 232 billion. Provident and pension funds invested Tk 229 billion, up 63%, and mutual fund investments rose 93% to Tk 12.26 billion. Individual investor contributions saw the highest growth at 328%, reaching Tk 47.21 billion. The rise in G-sec rates, with 91-day, 182-day, and 364-day treasury bills offering 11.65%, 11.80%, and 11.95% respectively, has made these securities more attractive compared to bank deposit rates, which are between 7.0% and 10.50%. Consequently, banks’ liquidity has decreased, from Tk 2.03 trillion in June 2022 to Tk 1.62 trillion by February 2024. The share of non-competitive bids in G-sec auctions has also increased significantly, exceeding 20%.
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