Dhaka inter-bank offer rate launched

Bangladesh Bank Governor Atiur Rahman formally launched yesterday Dhaka inter-bank offer rate (DIBOR), which will help banks get a benchmark interest rate or reference rate.
In line with the international regulators, the central bank issued a circular in December making the inter-bank offer rate effective from January 1 this year.
The governor said: "An established benchmark rate is required for the buoyancy and transparency of any interbank market. Hopefully, this is a beginning towards the development of a liquid interbank term market in Bangladesh."
"DIBOR will provide a leading indicator of our economic and financial condition to foreign investors, who for long have been enquiring about such an indicator," the BB governor said.
"For the domestic market it will provide a reference rate to price various new products. In the long run, DIBOR should allow the financial institutions to develop new and innovative products, which will bring benefits to business community and the economy as a whole."
Lending to local customers as well as foreign investors may be benchmarked with this new reference rate and will impact cost of fund of multiple entities, Rahman said.
"A benchmark rate will create a positive impression on our market and attract more foreign investors, as they will now have a reference rate, which they can use to estimate their financial projections."
Rahman also thanked Bangladesh Foreign Exchange Dealers' Association for its efforts in rolling out the offer rate. He called upon the association members to regularly contribute to the inter-bank offer rate as per the parameters set by the association.
Such offer rates existing in other cities include LIBOR in London, SIBOR in Singapore, TIBOR in Tokyo and EURIBOR in eurozone.
The central bank has introduced DIBOR after an effort of around four years.