Dhaka, Bangladesh (BBN)- The central bank of Bangladesh has taken a fresh move to know the actual investment in the capital market of the commercial banks through scrutinizing their latest statements.
"We've taken the move after detecting inconsistency in the reports, provided by at least 10 commercial banks, on holding of shares and exposure limit for the month of June this year," a senior official of the Bangladesh Bank (BB) told the Financial Express (FE), a local newspaper, on Thursday.
But the central bank has initially identified that seven private commercial banks (PCBs) crossed their exposure limit in the capital market investment in June last, he added.
"We'll sit with the banks this month separately to know why they had exceeded such limit," an executive director of the BB told the newspaper without elaborating.
The central bank had asked the banks concerned to submit their revised monthly statement regarding holding of shares and exposure limit for June 2010 along with July's statement by August 10.
"We've started scrutinizing the revised and fresh statements of the banks to know the actual investment figures in the months of June and July," another BB official said.
The BB set capital market exposure limit for the commercial banks in June last after identifying an 'abnormal growth' of investment in the capital market by the banks during April-May period of the current calendar year.
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.
The banks must have to comply with the capital market exposure limit and submit reports on their monthly-based share-holding position in a prescribed form to the Department of Off-site Supervision of BB within 10th of each month.
BBN/SI/AD-12Aug10-11:39 pm (BST)
