Dhaka, Bangladesh (BBN)– Bangladesh’s all scheduled banks are allowed to invest BDT 45 billion more in the capital market after adjusting their stock market overexposure by July 21.
“Such investment opportunity has been created following the central bank’s policy supports, provided to the banks for complying with the legal requirement on their stock market exposure within the stipulate timeframe without selling any shares in the market,” S K Sur Chowdhury, deputy governor of the Bangladesh Bank (BB) explained.
He also said it will help develop the capital market in the long run.
A total of 13 commercial banks, out of 56, availed the policy support to bring down their capital market investment within 25 per cent of their total capital within the stipulate timeframe in line with the Banking Companies (Amended) Act 2013.
After availing the policy support, the capital market exposures of One Bank stood at 23.99 per cent, followed by Janata Bank 23.81 per cent, Mutual Trust Bank and Mercantile Bank 23.69 per cent, Shahjalal Islami Bank 23.55 per cent, Premier Bank 22.39 per cent, AB Bank 21.99 per cent, National Bank 21.03 per cent, Bangladesh Development Bank 21.71 per cent, Pubali Bank 20.15 per cent, IFIC Bank 19.30 per cent, the City Bank 14.66 per cent, and Southeast Bank 11.90 per cent, according to the central bank latest statistics.
Now these 13 banks are allowed to invest BDT 15 billion more in the share market after adjustment of their overexposure by availing the BB policy support, the deputy governor added.
On April 27, the central bank extended the support to the banks for adjustment of their stock market overexposure within the stipulated timeframe without selling any shares in the market.
Under the policy support, a total of BDT 19.84 billion loan was converted into capital of the banks’ subsidiaries for complying with the share market exposure regulation within the deadline.
The banks were allowed to adjust their overexposure through restructuring the exposure components and enhancing the capital of their subsidiaries with some internal adjustments in line with the BB’s latest policy support.
Total capital of the 13 banks’ subsidiaries will be over Tk 35.40 billion following the policy support, the BB data showed.
Talking to BBN, Mr. Sur Chowdhury also said the authorities concerned should take effective measures to bring dynamism in the country’s capital market by restoring confidence of the investors.
The central bank of Bangladesh earlier instructed the banks to bring down their overall capital market investment within 25 per cent of their respective total capital by July 21, 2016 in line with the Banking Companies (Amended) Act 2013.
According to the Banking Companies Act 1991 (Amended in 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 the capital market different components, including all types of shares, debentures, corporate bonds, mutual fund units, and other securities, will be considered, it added.