Dhaka, Bangladesh (BBN)- Two more private commercial banks (PCBs) have applied to Bangladesh Bank (BB) seeking policy supports for adjustment of their capital-market overexposures within the timeframe, officials said.
The banks – the City Bank Limited and One Bank Limited – are still maintaining more than 25 per cent capital-market exposures while all banks’ capital-market exposures came down to 21 per cent in April from 23 per cent in March.
The central bank is now examining the applications for providing policy supports to adjust their capital-market overexposures without needing to sell out any shares in the market, a BB senior official told BBN in Dhaka on Tuesday.
Under the policy supports, four PCBs –AB Bank, Pubali Bank, Mercantile Bank and Mutual Trust Bank – have already transferred loans and shares worth BDT 17 billion to their capital market subsidiaries as capital.
He also said the central bank has already provided its policy supports to four PCBs on the same purposes.
Under the policy supports, the PCBs –AB Bank, Pubali Bank, Mercantile Bank and Mutual Trust Bank – have already transferred loans and shares worth Tk 17 billion to their capital market subsidiaries as capital.
“Such supports have helped the PCBs for bringing down their capital-market overexposures at a permissible limit,” the BB official explained.
He also said four more PCBs are now taking preparations to submit applications to the BB for availing the ongoing policy supports from the central bank.
“All 10 PCBs may invest again in the share market after adjustment of their overexposures,” the central banker noted.
Earlier on May 31 last, the central bank advised chief executive officers and managing directors of all banks at a bankers meeting to avail the latest policy supports for adjustment of their capital-market overexposures within the time limit.
The central bank will take regulatory actions immediately after the end of deadline, set by the BB earlier, another central banker said.
The BB earlier had asked the banks to bring down their overall capital-market investments within 25 per cent of total capital by July 21, 2016 in line with the Banking Companies (Amended) Act 2013.
According to the Banking Companies Act 1991 (Amended 2013), total capital comprises four components: paid-up capital, balance in share premium account, statutory reserve and retained earnings, as stated in the latest audited financial statements.
While calculating total investment in capital market different components, including all types of shares, debentures, corporate bonds, mutual fund units and other securities, will be considered.