Dhaka, Bangladesh (BBN)- The commercial banks of Bangladesh are now allowed to invest maximum BDT 2.0 billion in special instruments including Special Purpose Vehicle (SPV) and Alternative Investment Fund (AIF), officials said.
The central bank of Bangladesh issued a circular in this connection on Tuesday.
“The central bank has created a new window for investment of the banks through issuing the directive,” a senior official of the Bangladesh Bank (BB) told BBN in Dhaka.
The banks may take the opportunity for investment of their excess liquidity in the funds, which are registered with the Bangladesh Securities and Exchange Commission (BSEC), according to the official.
He also said investment in such funds will not be included in the capital market investment under the Banking Companies Act, 1991 (Amended up to 2013) of the investor bank.
“It indicates that the BB is working to create a conjugal investment environment for improving the country’s share market,” he noted.
Before making any firm commitment to investment in such funds, the investor bank company will have to apply for permission from Department of Off-site Supervision of the BB, according to the circular.
“The investor bank company shall enter into an agreement with the trustee of such fund(s) so that no investment shall be made by such fund(s)with any related party of the investor bank company or no investment shall be made to purchase the share/debenture/bond or similar instruments of the investor bank or no fund shall be deployed in such investment which constitutes a financial claim over any other bank or financial institution in future certifying that no such investment has already been made,” the central bank said in its circular.
The BSEC earlier approval Special Purpose Asset-back Securities Issuing Policy and the 'Bangladesh Securities and Exchange Commission (Alternative Investment) Rules, 2015' to promote the venture financing and equity investment facilities for non-listed local firms having fund shortage.
Under the rules, Alternative Investment' funds will have to be managed professionally by the fund managers and the trustees. Both the trustees and fund managers will have to be registered with the securities regulator.
The trustees will raise fund from the eligible investors who may be Bangladeshi, foreign and non-resident Bangladeshis (NRBs) by issuing units.
BBN/SSR/AD