Dhaka, Bangladesh (BBN) – The central bank of Bangladesh on Wednesday asked the commercial banks to comply with the rules and regulations relating to capital market investment without disturbing the share market.
The instruction came at a meeting with high ups of two private commercial banks, which have exceeded exposure limit in the capital market investment, held at the central bank on the day with Executive Director of Bangladesh Bank (BB) S K Sur Chowdhury in the chair.
The BB will complete discussion with six other private commercial banks separately within the next week to know why they had exceeded such limits, the central bank officials said.
The central bank earlier identified that eight private commercial banks crossed their exposure limit in the capital market investment in June last.
“We’ve started discussion with the banks to find out a strategy for complying with the existing rules and regulations on capital market investment properly,” a BB senior official said.
A certain timeframe might be given to the banks for brining down their holding and exposure within the prescribed limit through different measures.
The banks, however, will have to submit action plans to the central bank in this connection, the BB officials added.
“The central bank may extend timeframe on case to case basis to facilitate the banks concerned for complying with the existing rules and regulations,” a BB official said, adding that the central bank will monitor the performance of the banks in line with the action plan, which will be submitted by the banks concerned.
Under the new provisions, banks will be allowed to invest not more than 10 per cent of their total liabilities in the capital market.
Besides, the banks will have to ensure holding of shares in line with the existing Bank Companies Act, the central bank officials said.
Under the existing act, no bank company shall be empowered to hold shares of other companies whether as pledge or mortgage or as exclusive owner of an amount exceeding (a) thirty per cent of the total amount of the paid-up capital and reserve of the said company and (b) thirty per cent of the paid-up capital of the said company.
The amount of the shares fixed by any bank company shall, in total, not exceed 10 (ten) per cent of its whole obligations, the act said.
BBN/SI/AD-19Aug10-10:59 am (BST)