Dhaka, Oct. 15 -- The yield on five-year treasury bonds fell below the central bank's policy rate on Tuesday, as banks channelled surplus liquidity into government securities amid subdued private sector credit demand in the run-up to the national election.

According to auction results, the cut-off yield, or interest rate, on the Bangladesh Government Treasury Bonds (BGTBs) declined to 9.34 per cent from 10.03 per cent earlier.

This marks the first time in months that the yield has slipped under the Bangladesh Bank's (BB) policy rate of 10 per cent, signalling excess liquidity in the banking system.

The government borrowed Tk 30 billion through the issuance of the BGTBs to help finance its budget deficit, official data show.

"A good nu...