The Bangladesh Bank has introduced a unified process for investments in government securities and bonds in an effort to strengthen the bond market.
According to a central bank notification Monday, investors will have to fill up the same application and submit the same documents regardless of their banks or financial institutions for the investments.
Investors can invest in government securities and bonds through the government securities investment window at banks and financial institutions. Such investors are called business partners.
The banks and financial institutions open separate accounts on behalf of the business partners, while the minimum investment limit is Tk1 lakh.
Until the Bangladesh Bank Monday circular, there has been no single instruction about applying for such investments. The applications would have been different, and the applications would not have all the required documents.
The central bank, in the circular, provided the list of documents for each investor. Moreover, the Bangladesh Bank has specified the application format.
According to the central bank sources, banks and financial institutions will preserve the applications and documents they receive from the clients. They will forward only the soft copies of the documents to the central bank.
The banks and financial institutions will have to show the hard copies of the documents during the central bank inspections.
The circular regarding account opening said scheduled banks and financial institutions maintaining accounts with the central bank Motijheel headquarters will take the initiative to open business partner identification in favour of their individual or institutional customers in the market infrastructure module of the Bangladesh Bank to participate in the auctions.
"Individuals may also buy or sell government securities in the secondary market over the counter or trader workstation of the module," it said.
A government security is a tradable instrument issued by a government. It acknowledges the government's debt obligation.
Such securities can be short-term or long-term. Short-term securities are called treasury bills with original maturities of less than one year, while long-term securities are called government bonds or dated securities with an original maturity of one year or more.