Dhaka, Bangladesh (BBN)- The central bank of Bangladesh has intensified its monitoring and supervision of investment in share market by the commercial banks to avoid any unwanted situation in future, officials said.

Under the latest measures, the banks have been asked to submit their total fresh investments in share market, fresh fund provided to their subsidiaries, funds given to others for capital market activities and margin loans provided to the customers by the subsidiaries on daily basis.

Besides, the banks have to submit reports on their share-holding position on a monthly basis in a prescribed form to the BB’s Department of Off-site Supervision within the 10th of each month.

“The central bank has taken the issue as a top priority matter to minimise risks of the banks,” a senior official of the Bangladesh Bank (BB) explained.

He also said the central bank is collecting such information as part of its intensified monitoring and supervision of investment in the share market by the banks.

The central bank has taken the latest measure against the backdrop of some banks increasing investment in the share market instead of bringing it down in line with the Banking Companies (Amended) Act 2013.

Earlier on September 16 last year, the BB asked the commercial banks to bring down their overall capital market investment within 25 per cent of total capital by July 21, 2016 to minimise risks in investment portfolios.

The banks are allowed to adjust their capital market exposures gradually without hindering the activities of the market, the central banker added.
According to the Banking Companies (Amended) Act, 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 the banks’ total investment in the capital market, all types of shares, debentures, corporate bonds, mutual fund units and other securities, owned by them, will be considered.

BBN/SSR/AD-18Feb14-9:07 am (BST)