The Bangladesh Bank has fined the new generation NRB Bank Tk49.50 lakh for manipulating the share price of a single company.
The bank was penalised after evidence of share price manipulation was found in an investigation conducted by the central bank.
According to the findings, the bank invested aggressively in the share of a single company and participated in the price manipulation.
A bank cannot invest more than 5% of its total capital and 10% of its paid-up capital in a single share as per the banking law. NRB Bank made investments violating the ceiling and manipulated share price by continuous selling and buying, which ultimately caused a loss of Tk37 crore for the bank.
A month ago, the bank closed its chief financial officer Md Kamrul Hasan for his alleged involvement in the share manipulation.
The bank is now conducting an investigation into this matter to find out others involved in it.
When contacted, Mamoon Mahmood Shah, managing director and chief executive officer at NRB Bank, said the bank detected the anomalies in stock investment and closed its CFO. The matter was later reported to the central bank.
The accused CFO, Kamrul Hasan, told The Business Standard that he had been withdrawn for some misunderstanding over share investment. However, he did not explain the issue of misunderstanding. He claimed that the matter has now been solved.
This is not only in one bank, top officials of some more banks were found involved in share price manipulation, creating price bubbles in the market, according to the central bank findings.
The Bangladesh Securities and Exchange Commission (BSEC) has surveillance, but it could not detect such a share manipulation of banks.
The overplay of banks in the stock market led the Bangladesh Bank to conduct an investigation and the central bank finally unearthed their involvement in share price manipulation.
Earlier, another new generation bank was fined Tk23 lakh for over investment in stocks, violating the banking law.
It is now thought that banks played a role in the recent price surges.
In the last one year when the overall economic activities were stagnant, only the stock market remained vibrant. Share prices of 140 listed companies, mostly small-cap and junk ones, increased by 100%-1200% in the last one year, putting retail investors at risk.
Share manipulation of the insurance sector was widely discussed among stock investors.
Shares of 48 out of 53 listed insurance companies gained prices between above 100% and 750% in the last one year, according to Dhaka Stock Exchange (DSE).
The prices of junk and small cap shares increased unusually without any fundamental reason or improvement in financial health or dividend declaration, which reflects that there was manipulation, said a senior executive of the Bangladesh Bank.