BB seeks monthly info of special funds for stocks
The Bangladesh Bank (BB) asked banks to provide information every month instead of a quarterly basis about the special funds for investment in the capital market.
In a circular issued on Tuesday, the central bank said all scheduled banks would have to submit monthly reports within five days of the following month.
Banks have to submit details of related bank accounts and BO accounts.
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In February last year, the banking regulator rolled out a package allowing banks to set up a Tk200-crore fund by taking it from the BB through a repurchase agreement against treasury bills and bonds they own.
The banks have to pay 5% interest for the fund and the credit tenure is up to February 2025. Such investments by banks have given a boost to the stock market that has been showing an upward trend.
However, investing in stocks is not the primary function of banks, so they should focus on lending to the real economic sector.
On 12 August, the Bangladesh Bank instructed the scheduled banks to provide it with information on their capital market net exposure or investment and short- term loans and placement (bank-to-bank deposits) by 5pm daily.
Before that, scheduled banks used to share this information fortnightly.
The decision was taken to strictly monitor the cash flow to the capital market as money is now cheaper than ever with low interest rates in the banking system.
Recently, the Bangladesh Bank said it had information on the misuse of stimulus packages by banks and other manufacturing companies. The central bank came to know that money provided under the stimulus packages was invested in the capital market and unproductive sectors.
