BSEC urges banks to inject fresh funds into the stock market
The central bank in February 2020 allowed banks to form a special fund of Tk200 crore each and invest in the capital market
The Bangladesh Securities and Exchange Commission (BSEC) requested all the local banks to inject fresh funds into the stock market.
In its letter addressing the managing directors and chief executive officers of each of the banks, the BSEC urged them to pour fresh funds up to a fair extent of their respective limits in both on and off-exposure accounts, for the sake of strengthening the institutional investor base of the stock market.
The central bank in February 2020 allowed banks to form a special fund of Tk200 crore each and invest in the capital market and the investment would remain excluded from their capital market exposure.
The majority of banks barely showed their appetite for the special opportunity to invest in stocks, whether in the bear or bull market.
Besides, the BSEC also said, a bank can invest up to 25% of its equity in the listed instruments, but it is observed that the exposure limit of many banks remains below that.
The capital market facilitates the banking industry's primary capital accumulation through the large initial public offerings, right share offers, and stock dividends alongside supporting their additional Tier-I and Tier-II capital bases strengthening through issuing bonds, BSEC said in its letter.
The securities regulator expects them to opt-in as a strong group of institutional investors in the stock market, within their existing scope to support the capital market and be a motivation for others.
The stock market, since October, has been in low momentum following a sharp rally over the previous 15 months.