Abu Taher Bappa

Published:
2020-07-23 11:38:09 BdST

Stock market investment25 banks get go-ahead for fund formation


A total of 25 banks have secured their boards' approval for investing Tk 2.0 billion each in the capital market.

The banks have submitted their information about the formation of a special fund to the Bangladesh Securities and Exchange Commission or BSEC after the regulator's letter sent in late June.

"A large number of boards have allowed their banks to form a special fund for the capital market. But the actual of investments so far made in the market has yet to be remarkable," a commission official said.

He said the total amount of investments so far made by the banks is lower than Tk 2.0 billion.

Of the banks, which took their board approval for the fund, 20 are listed and the rest are non-listed.

Asked, a senior official of the Bangladesh Bank said the aggregate amount of funds so far formed by banks is Tk 16.50 billion.

"The Covid-19 pandemic has slowed the process of forming special fund. Perhaps, the banks are also not taking the risk of investment just after June closing," the BB official said.

He said the central bank is working on expediting the formation of special fund announced for the capital market.

"We are taking information from the banks regarding the formation of special funds on a regular basis. We hope to get feedback on the fund after Eid-ul-Ajha ," the BB official said.

In February, the central bank issued a notice, allowing all banks to create a Tk 2.0 billion fund each for a period of five years to invest in the capital market.

The central bank's move came following the market intermediaries' demand for forming a Tk 100 billion fund to support the country's ailing stock market.

According to the notice, a bank can create such a fund from its own resources or with financing received from the BB through the repo or re-financing schemes.

The special fund will be allowed to be invested in equity shares, mutual funds, bonds or debentures, and special purpose funds maintaining the prescribed criteria.

And the banks will not need to make any provision for a decrease in the market value of their investments.

Of the listed banks, Pubali, United Commercial Bank and NCC, among others, have submitted information to the securities regulator.

Of the non-listed banks, Bangladesh Commerce bank, Community Bank, Meghna Bank and NRB Commercial Bank have submitted information to the commission.

"We are scrutinising the banks' information regarding the formation of special fund and investments made with it. We hope the remaining listed banks will submit their information within a week," the BSEC official said.

According to BB's data, Janata Bank and The City Bank earlier received Tk 800 million and Tk 500 million respectively from the central bank through repo.

Of the state banks, the Rupali Bank had earlier formed a Tk 850 million (85 crore) fund from its own resources in line with the BB circular.

Sonali Bank, the largest state-owned bank, formed a Tk 2.0 billion fund from its own coffers.

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