Economic Reporter :
Bangladesh Bank has rejected the government’s move to raise the limit of banks’ stock market exposure and state loan guarantee to large business group for investment in priority sectors.
Besides, the local business groups can take any large scale loan from banking sector through syndication of banks and financial institutions if the government provides guarantee to the loans.
Bangladesh Bank General Manager Abu Fara Md Nasar last week sent a letter for not amending the provisions 26 (A) and 26 (B) of Bank Companies Act 1991.
He said if the provisions are amended, there will be a negative impact on the country’s stock market.
Officials of the Bank and Financial Institution Division said the central bank does not agree with the amendment of the that provision 26 (A) as the big groups want to have contracts with the banks who invest in stocks.
They said the central bank thinks the investments are not certain and market base. BB letter reads: “Overall bank investment in the stock market needs to limit for betterment of the local stock market.”
It says the government will provide guarantee to the business group loans on case to case basis.
It says: “The syndicated loans to the large business groups will ease risk in implementation of any big project.”
Under the provision 26 (A), the bank is not allowed to invest in stock market more than 5% of its total paid up capital.
The banks’ share market exposure limit is 25% of its capital under the provision 25 (B) of the Bank Companies Act 1991.
Bangladesh Bank has rejected the government’s move to raise the limit of banks’ stock market exposure and state loan guarantee to large business group for investment in priority sectors.
Besides, the local business groups can take any large scale loan from banking sector through syndication of banks and financial institutions if the government provides guarantee to the loans.
Bangladesh Bank General Manager Abu Fara Md Nasar last week sent a letter for not amending the provisions 26 (A) and 26 (B) of Bank Companies Act 1991.
He said if the provisions are amended, there will be a negative impact on the country’s stock market.
Officials of the Bank and Financial Institution Division said the central bank does not agree with the amendment of the that provision 26 (A) as the big groups want to have contracts with the banks who invest in stocks.
They said the central bank thinks the investments are not certain and market base. BB letter reads: “Overall bank investment in the stock market needs to limit for betterment of the local stock market.”
It says the government will provide guarantee to the business group loans on case to case basis.
It says: “The syndicated loans to the large business groups will ease risk in implementation of any big project.”
Under the provision 26 (A), the bank is not allowed to invest in stock market more than 5% of its total paid up capital.
The banks’ share market exposure limit is 25% of its capital under the provision 25 (B) of the Bank Companies Act 1991.
