BSEC urges state banks to raise stock stakes

The Bangladesh Securities and Exchange Commission (BSEC) has requested Sonali, Rupali, Janata and Agrani banks to raise their stakes in the stock market.

The BSEC sent letters to the managing directors of the four state-run banks on Tuesday requesting to take necessary steps to make fresh investment through their respective portfolios.

Tap here to add The Daily Star as a trusted source

It also requested to provide information regarding investments from the banks' own portfolios as of April 18, 2022 as early as possible.

"It is expected that the institutional investors be dominating trading activities instead of retail ones to improve the stability of the country's capital market," it said.

However, the investor base in Bangladesh's capital market is mostly dominated by retail investors, whose account for around 80 per cent of the total investors, said the BSEC.

The BSEC also requested stock dealers to raise investments in the stock market.

Stock dealers are big investors who avail licences from the BSEC to deal stocks for themselves, in contrary to brokers who deal stocks for others.

The dealers differ from individual investors for the fact that their licences come with prerequisites such as a minimum investment requirement but have other advantages such as reservations of IPO quotas.

The banks can invest funds by taking loans from Bangladesh Bank as it gave the approval for banks to form a Tk 200 crore special fund for the purpose, which will not be incorporated in their capital market exposure limit, it added.

The Banking Companies Act 1991, amended in 2013, allows a bank's stock market exposure to be up to 25 per cent of its capital which includes paid-up capital, share premium, statutory reserve and retained earnings.

On February 10, the banking regulator rolled out the package that allows banks to set up a Tk 200 crore fund by taking it from Bangladesh Bank through a repurchase agreement against treasury bills and bonds they own.

The banks will have to pay 5 per cent interest for the fund and the credit tenure will be of up to February 2025.

The DSEX, the benchmark index of Dhaka Stock Exchange, rose 55 points, or 0.89 per cent, to 6,662 points yesterday.