BSEC wants to monitor banks' stock market investments
It wants all banks to further support the market with their entire 25% exposure limit
The Bangladesh Securities and Exchange Commission (BSEC) has urged all banks to provide it with information on their investments in the capital market twice a month so the market regulator can monitor their exposure limits amid a liquidity crisis.
To this end, the securities regulator sent a letter to managing directors of all scheduled banks on Wednesday.
"The scheduled banks are big institutional investors, which are supporting the capital market. We have requested them to let us know whether they have retained its entire permitted 25% exposure to the market," BSEC spokesperson Mohammad Rezaul Karim told The Business Standard.
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To ease the liquidity crisis in the capital market, the BSEC wants all banks to further support the market with their entire exposure limit, he further said.
Currently, banks and non-bank financial institutions are allowed to invest 25% of their capital in the stock market, which is called the exposure limit.
Banks now can calculate their stock market exposures based on cost price instead of the market price of shares, corporate bonds, and mutual funds.
On 4 August, the central bank gave them the opportunity in the light of a demand from both the BSEC and stakeholders.
Earlier, on 10 February 2020, the Bangladesh Bank approved banks' formation of a Tk200 crore special fund to invest in the stock market, which will not be included in the calculation of the capital market exposure limit.
The fund will remain valid until February 2025, and the banks can take advantage of the loans until 13 January 2025.
