FE Today Logo

Seven errant banks seek exoneration from penalty

Each fined Tk 1.7m for violating limit on investment in stocks


Siddique Islam | October 26, 2017 00:00:00


Seven commercial banks have appealed to the central bank's board of directors to waive the financial penalty imposed on them for violating the rules relating to share-market investment.

Their petitions may be included in the agenda for the board meeting scheduled to be held next month, according to officials.

They said there is no scope of putting the issue on the agenda for the board meeting scheduled for today (Thursday).

"The agenda for Thursday's (today’s) board meeting have already been finalised," a senior official of the Bangladesh Bank (BB) told the FE, without elaborating.

Earlier this month, the central bank imposed fines on the banks for violating the rules of the existing Banking Companies Act and the central bank's instructions on share-market investment.

Three state-owned commercial banks (SoCBs) along with four private commercial banks (PCBs) are on the list of the banks meted out pecuniary penalty -- Tk 1.7 million each.

"Yes, we've submitted an appeal to the central bank seeking exemption from the penalty," a senior executive of a bank, which is in the bunch of lawbreakers, told the FE.

He wouldn't give the details.

Sources, however, said one bank or two had exceeded their share-market-exposure limits on consolidated basis and others had submitted fake information on their investment in stocks to the central bank on weekly and monthly bases.

The banks also invested their funds further in the share market while having total investments above the prescribed limits, they added.

Talking to the FE, another BB official said the central bank is monitoring the roles of banks and non-banking financial institutions (NBFIs) in the share-market operations closely to avert any unwanted situation.

"We're always playing supportive roles for development of the country's capital market," the central banker noted.

The BB intensified its monitoring and supervision on banks' investment in the capital market on September 11 this calendar year through revising reporting format for avoiding recurrence of unwanted situation in future.

Under the revised provisions, the banks are now allowed to submit their reports on fresh investment in the capital market to the BB on a weekly basis, mentioning daily transactions separately.

Earlier, the banks were eligible for submitting such weekly reports to the central bank on gross-transaction basis sans mentioning daily transactions individually.

The BB's latest move comes against the backdrop of a sharp rise in the prime index of the Dhaka Stock Exchange (DSE) in recent months.

Between July 01 and September 30 of the current fiscal year, DSEX, the benchmark index of the country's prime bourse, rose 473 points or 7.72 per cent to reach 6,093 points on September 30, 2017.

In 2014, the central bank asked the banks to limit their total investment in capital market on consolidated basis along with the existing solo one to minimise risk in investment portfolios.

Under the exiting provisions, the market value of total investment of a banking company in the capital market on consolidated basis must not exceed 50 per cent of its consolidated paid-up capital, balance in share-premium account, statutory reserves and retained earnings as stated in the latest audited financial statements.

On the other hand, the banks are now allowed to invest maximum 25 per cent in the capital market of their total capital on solo basis in line with the Banking Companies (Amended) Act 2013.

According to the Banking Companies Act 1991 (Amended 2013), total capital comprises four components: paid-up capital, balance in share- premium account, statutory reserves and retained earnings, as stated in the latest audited financial statements.

In calculating total investment in capital market, different components like all types of shares, debentures, corporate bonds, mutual fund units and other capital-market securities have to be taken into account.

siddique.islam@gmail.com


Share if you like



COMPANY YCP HIGH LOW CLOSE %CHG
KPCL 83.2 91.5 79.5 91.5 9.976%
CENTRALPHL 15.4 16.9 16.4 16.9 9.7403%
SONALIANSH 396.4 431.0 396.0 431.0 8.7286%
FUWANGCER 13.1 14.4 13.2 14.2 8.3969%
FUWANGFOOD 14.8 16.2 15.0 16.0 8.1081%
WMSHIPYARD 18.0 19.7 17.9 19.4 7.7778%
RDFOOD 13.3 14.6 13.3 14.2 6.7669%
LIBRAINFU 1190.6 1265.0 1120.0 1265.0 6.249%
STYLECRAFT 1129.3 1199.8 1199.8 1199.8 6.2428%
NAHEEACP 64.2 68.8 64.1 67.7 5.4517%
COMPANY YCP HIGH LOW CLOSE %CHG
KARNAPHULI 15.3 15.3 14.0 14.0 9.2857%
KPCL 91.5 91.5 79.5 84.0 8.9286%
SONALIANSH 431.0 431.0 396.0 399.4 7.9119%
FUWANGCER 14.3 14.4 13.2 13.3 7.5188%
MEGHNALIFE 55.0 55.5 51.2 51.2 7.4219%
FUWANGFOOD 16.0 16.2 15.0 15.0 6.6667%
WMSHIPYARD 19.3 19.7 17.9 18.1 6.6298%
LIBRAINFU 1265.0 1265.0 1120.0 1188.0 6.4815%
AL-HAJTEX 79.6 82.0 75.1 75.1 5.992%
PF1STMF 5.5 5.5 5.2 5.2 5.7692%
COMPANY YCP HIGH LOW CLOSE %CHG
SAMATALETH 56.4 55.4 50.8 50.8 -9.9291%
FINEFOODS 44.0 42.9 39.9 40.3 -8.4091%
ZEALBANGLA 44.3 44.7 40.0 40.6 -8.3521%
SALVOCHEM 17.0 16.9 15.4 15.6 -8.2353%
DESHBANDHU 15.5 15.2 14.1 14.3 -7.7419%
MEGHNACEM 102.9 105.0 96.0 96.4 -6.3168%
ICB 123.2 120.0 115.0 115.6 -6.1688%
BIFC 5.0 5.3 4.6 4.7 -6%
DAFODILCOM 32.3 32.3 30.1 30.4 -5.8824%
BEACHHATCH 12.1 12.9 11.4 11.5 -4.9587%
COMPANY YCP HIGH LOW CLOSE %CHG
INTRACO 31.4 35.0 30.9 35.0 -10.2857%
SAMATALETH 50.8 55.4 50.8 55.4 -8.3032%
MEGHNACEM 96.8 105.0 96.0 104.8 -7.6336%
BXSYNTH 6.2 6.9 6.2 6.7 -7.4627%
WATACHEM 499.0 537.0 498.0 537.0 -7.0764%
ALLTEX 8.1 8.9 8.1 8.7 -6.8966%
AMBEEPHA 578.0 637.1 568.2 620.0 -6.7742%
SIMTEX 36.9 39.5 36.9 39.5 -6.5823%
ZEALBANGLA 41.9 44.7 40.0 44.7 -6.264%
TUNGHAI 4.5 4.8 4.4 4.8 -6.25%