Dhaka, Bangladesh (BBN) – The central bank of Bangladesh has extended the timeframe by two years more for the non-banking financial institutions (NBFIs) to facilitate adjustment of their investment in shares, officials said.
Under the amended provisions, the NBFIs will have to adjust the excess amount of investment in shares by December 31, 2012, instead of earlier scheduled December 31, 2010.
Under the Financial Institutions Act -1993, the NBFIs are now allowed to invest in shares up to 25 per cent of their total capital.
The central bank has recently issued a circular in this connection and asked the managing directors and chief executives of all 30 NBFIs to follow the latest instructions for adjustment of their excess amount of investment in shares within the extended deadline.
“However, the existing investment level cannot be increased during the extended adjustment period,” the BB said in its circular.
“We’ve extended the time-period considering the overall situation in the country’s stock market,” a senior official of the Bangladesh Bank (BB) said, adding that it is a supportive measure aiming to bring stability in the market.
The Bangladesh Leasing and Finance Companies Association (BLFCA) will seek clarification about investment in the capital market by their subsidiaries, brokerage houses and merchant banking wings.
“We need clarification about our subsidiaries whether all of them will be exempted or not — in order to comply with the BB’s provisions relating to investment in share market until December 31, 2012,” the BLFCA acting Chairman Asad Khan was quoted the Financial Express (FE), a local newspaper, as saying.
He also said the BLFCA expects the same line of instruction from the BB as was issued by it on September 19 last for the commercial banks.
On Monday last, the central bank extended the time-period by one year for adjustment of ‘single borrower exposure limit’ by the commercial banks for financing the operations of their subsidiaries, brokerage houses and merchant banks.
Under the amended provisions, the banks will have to adjust the excess amount of their loans over the single borrower exposure limits for their respective subsidiaries by December 31, 2012, instead of December 31 this year.
BBN/SSR/AD-23Sept11-4:13 pm (BST)
