The Bangladesh Bank has relaxed capital market investment rules for banks so that they can increase investment, but still many banks look least interested in it
Merchant bankers did not get a single penny in more than a month since the central bank announced to help banks form up to Tk200 crore funds each for investing in the stock market.
The Bangladesh Bank has relaxed capital market investment rules for banks so that they can increase investment, but still many banks look least interested in it, said Md Sayadur Rahman, president of Bangladesh Merchant Bankers Association.
"We have requested the governor to push the banks for arranging funds immediately for investments in the market," Sayadur told reporters after a meeting with Bangladesh Bank Governor Fazle Kabir at his office on Sunday.
According to a Bangladesh Bank official, only 11 banks have so far have arranged funds.
"We have sought the central bank's strong monitoring so that all banks take the opportunity," said Sayadur.
Earlier, on February 10, the Bangladesh Bank issued a circular allowing the banks to invest up to Tk200 crore each in the stock market beyond their regulatory limit for the next five years.
The banks are allowed to invest 25 percent of their capital in the stock market. But the new funds will not be counted as a part of that limit.
According to the circular, the banks can set up the fund from their own source or take the money from the central bank through repo at 5 percent rate.
Banks can lend this money to their subsidiaries such as merchant bankers and brokerage houses at 7 percent interest rate.
The initiative has opened up an opportunity to bring fresh investment of around Tk12,000 crore from all 59 banks in the country.
After the circular was issued, the market witnessed a quick rise for a short time, but then it went on a free fall amid the coronavirus pandemic worldwide.