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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