In a major development, the central bank will sit with all the commercial banks today to derive a mechanism of settling treasury bills through the central depository system (CDS), which is expected to be launched this year.

Sources said the trial operation of the treasury bill settlement with the Central Depository Bangladesh Ltd (CDBL) is on. The CDBL is expected to launch its formal operation this year. Initially, the depository will facilitate settlement of stock trading in the bourses.

However, the Bangladesh Bank is now thinking of integrating the banks with the central depository to enable settlement of the bills among the banks and financial institutions.

The central bank, led by its governor, will sit with the managing directors of all the commercial banks to discus the issue.

Through integration of the banks with the CDBL, even general investors' will be able to participate in trading of such government bonds.

Experts say such inclusion of the general investors in the bond market will facilitate investors with wide variety of options to invest their funds.

According to sources, CDBL is expected to launch operation in November this year. Apart from facilitating settlement of share trading in the stock exchanges, it is also expected to facilitate settlement of treasury bills transaction.

CDBL sources admitted that the depository is in talks with a number of commercial banks on the issue. A total of 23 banks are in discussion with the CDBL for availing of the service.

The central bank has already invited applications for dealers in secondary treasury bills market.

Currently, all the banks and the financial institutions are able to purchase treasury bills through auction.

But with the appointment of dealers, the banks and financial institutions will be able to buy treasury bills from the central market through these appointed dealers while the general investors and institutions without dealers will have to trade through these authorised dealers only.

At present, the lowest instrument of treasury bills lot is Tk one lakh. But the central bank sources said the lot would be reduced to accommodate general investors in the secondary treasury bill market.

They said market would be expanded to ultimately develop a bond market in Bangladesh.