Dhaka, Bangladesh (BBN)– Investment Corporation of Bangladesh (ICB) is going to inject more fresh funds into the capital market to keep the market stable ahead of the upcoming national election.
Under the move, the state-run investment agency is now working to collect fund worth BDT 20 billion through issuing its subordinate bonds shortly, market insiders said.
The ICB chairman Prof. Mojib Uddin Ahmed expects that the fund will be available for investment by the end of this month. “We’ll invest more in the share market in line with the market requirement.”
On the other hand, all scheduled banks are now exempted from complying with the relevant section of existing Banking Companies Act (BCA) for investing in the ICB’s subordinate bonds.
Following the exemption, investment in the ICB bonds will not be included as exposure in the share market by the banks concerned.
Talking to the BBN, a senior official of the Bangladesh Bank (BB) said the central bank has issued a notification in this connection after consultations with the government.
“Such exemption will help encourage the banks to invest their funds in the bonds.
Currently, the banks are allowed to invest maximum 25 per cent of their total capital in share market on solo basis in line with BCA (Amended) 2013.
According to BCA 1991 (Amended 2013), total capital comprises four components: paid-up capital, balance in share premium account, statutory reserves and retained earnings, as stated in the latest audited financial statements.
While calculating total investment in capital market, different components, including all types of shares, debentures, corporate bonds, mutual fund units and other capital market securities, will be taken into account.
The Bangladesh Securities and Exchange Commission (BSEC) earlier approved the ICB’s proposal for issuing bond.
The tenure of the ICB’s non-convertible and fixed rate bond will be seven years. The bond will be fully redeemable, unsecured and unlisted.
The bond units will be issued to different banks, insurance companies, financial institutions, corporate entities, and high-net worth individuals through private placement.
The fund will be invested in primary and secondary market as part of its market-maker role.
The ICB will also invest the fund as sponsor of NRB Mutual Fund and NRB Industrial Fund along with investment in infrastructure and ‘thrust’ sectors of the government, and in public-private partnership (PPP) projects.