4 banks move to form spl funds for stocks

Author Topic: 4 banks move to form spl funds for stocks  (Read 169 times)

Offline Tamanna Sharmin Chowdhury

  • Jr. Member
  • **
  • Posts: 85
  • Test
    • View Profile
4 banks move to form spl funds for stocks
« on: March 02, 2020, 02:27:54 AM »
Four banks have moved to form special funds for the capital market investment complying with a Bangladesh Bank directive.

The four banks are Dhaka Bank, Sonali Bank, Rupali Bank and The City Bank, said sources in the BB and the Bangladesh Securities and Exchange Commission.

The City Bank has applied to the central bank for renewal of Tk 50 crore in REPO facility, previously taken for the stock market investment purpose.

An official of The City Bank told New Age that the bank had initiated a process to form the special fund under the BB’s circular.

The boards of directors of the three other banks approved the formation of the special funds.

The Bangladesh Bank on February 10 allowed each bank to form a Tk 200-crore special fund by taking low-interest loans from the central bank to invest in the stock market. The BB came up with the decision in a bid to stabilise the ailing capital market.

The circular said that the fund would be valid till February, 2025 and the banks would be allowed to take money under the scope till January 13, 2025.

The investment is exempted from calculation of banks’ capital market exposure.

The central bank would issue the fund to the banks against the treasury bills or bonds held by them at the rate of 5 per cent.

The central bank had made the move following a proposal placed by the merchant banks to provide Tk 10,000 crore in loans to lessen liquidity crisis in the capital market.

Before the decision, the core index of Dhaka Stock Exchange had lost over 1,900 points in 11 consecutive months, which became a major headache for the government.

Therefore, the central bank made the mechanism to support the market.

After the BB’s circular on special fund, the core index gained 283 points in the following five trading sessions.

Source: https://www.newagebd.net/article/101006/4-banks-move-to-form-spl-funds-for-stocks