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Conversely, borrowing from scheduled banks amounted to Tk 64,186.1 crore, contributing to the overall increase in borrowing from the banking system.

These moves are designed to control persistent inflation, which has hovered above nine percent since March 2023.

The government also repaid Tk 12,542 crore for outstanding fertiliser and electricity bills through the issuance of special bonds. In the last fiscal year, the government had repaid Tk 36,586 crore for the same purpose.

However, borrowing from non-banking sources witnessed a sharp increase, contributing Tk 24,688.2 crore to overall domestic borrowing, compared to Tk 7,089 crore during the same period last fiscal year.

Typically, the government borrows from non-bank sources through the issuance of savings instruments. However, in recent years, repayments have exceeded sales of savings instruments, leading to negative net borrowing from this system.

During the first six months of the current fiscal year, net borrowing from savings instruments stood at a negative Tk 2,244 crore, compared to a negative Tk 6,063 crore during the corresponding period last fiscal year.

Notably, non-bank borrowing was driven by the sale of government securities, including special bonds designed for individual investors, which have become an increasingly attractive option for both institutional and private buyers.

In the context of government borrowing from individual sources, treasury bills and treasury bonds have emerged as key instruments, catering to a broad base of investors, ranging from insurance companies to individual savers.

The issuance of these bonds aligns with the government’s strategy to diversify its funding sources, particularly from the domestic non-banking sector.

For the government, the shift toward treasury bonds and specialised securities aimed at individual investors presents a dual advantage: it not only provides much-needed liquidity but also taps into the growing interest among citizens in safer investment avenues.

“The rise in borrowing from the non-banking sector underscores the strong demand for government securities,” said a central bank official.