Thirteen commercial banks are now free to make fresh investments of up to Tk 1,500 crore in listed securities -- cheery news for the ailing stockmarket.
The development comes after Bangladesh Bank allowed the banks to restructure their balance sheets such that their investment exposure to the stockmarket fell within 25 percent of their total capital by July 21 in line with the Banking Companies Act 2013.
The banks converted their share credit in their subsidiaries into the latter's capital.
As a result, the total capital of 13 banks' subsidiaries increased by about Tk 3,540 crore: Tk 1,984 crore in loans, Tk 1,294 crore invested in shares, Tk 41 crore in mutual funds and Tk 220 crore invested in placement shares.
The central bank's policy support not only strengthened the subsidiary companies' capital structure but also brought down the banks' investment exposure below the permissible limit without selling any shares to the market, BB Deputy Governor SK Sur Chowdhury told a group of reporters on Thursday.
“The move also created an opportunity for 13 banks to make fresh investments of up to Tk 1,500 crore in the stockmarket,” he said, adding that all commercial banks can make investments of up to Tk 4,500 crore in the market. A positive move on the banks' capital market investment exposure was a long demand from the stakeholders, so that the banks, which are the major institutional investors, can make fresh investment in the secondary market, said Akter H Sannamat, a market analyst.
“Now the banks are compliant and don't need to sell shares to adjust their investment exposure. They can also take the opportunity of investing in securities that are being traded at comparatively low prices.” On the other hand, it will have a positive impact on general investors' mind too.
“The general investors always feared an extra selling pressure from banks to adjust their investment exposure,” said Sannamat, also former managing director of Union Capital and Prime Finance and Investment.
The central bank's move will ensure the banks' active participation as institutional investors in the ailing secondary market, he added. The stockmarket is maintaining a bearish trend since the inevitable price crash of early 2011.
DSEX, the key index of the Dhaka Stock Exchange, stood at 4,077 points last Thursday. It was 5,334 points even less than two years ago.
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