BB asks PCBs to stick tostock market regulations

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Siddique Islam
The central bank has reiterated that the commercial banks comply with the rules and regulations relating to capital market investment without hampering the share market, officials said.
The instruction came at a meeting with high-ups of a private commercial bank (PCB), which has exceeded the share holding limits, held at the Bangladesh Bank (BB) Sunday with Executive Director of the central bank S K Sur Chowdhury in the chair.
The central bank will sit with two other PCBs separately today (Monday) and tomorrow (Tuesday) to know about why they had exceeded such limits, the BB officials said.
The central bank of Bangladesh identified for the second time that three PCBs crossed their share holding limits in the month of August 2010.
A total of 11 PCBs have been detected since June last as they have exceeded shares' holding as well as exposure limits, the BB officials added.
"We're giving specific timeframes on case to case basis to the banks for brining down their holding and exposure within the prescribed limit using different measures," a BB senior official told the FE.
He also said the central bank had given timeframes to eight PCBs earlier for complying with the existing rules and regulations relating to capital market investment.
"All 11 PCBs will have to bring down their holding and exposure within the prescribed limit by November this year," the BB official said, adding that the central bank is monitoring the performance of the banks in line with the action plans, which have been submitted by the banks concerned.
"We expect that the banks will be able to bring down their holding and exposure within the prescribed limits shortly," another BB official said, adding that it would be possible to comply with the rules and regulations without disturbing the share market.
Under the new provisions, banks will be allowed to invest not more than 10 per cent of their total liabilities in the capital market.
Besides, the banks will have to ensure holding of shares in line with the existing Bank Companies Act, the central bank officials said.
Under the existing act, no bank-company shall be empowered to hold shares of other companies whether as pledge or mortgage or as exclusive owner of an amount exceeding (a) thirty per cent of the total amount of the paid-up capital and reserve of the said company and (b) thirty per cent of the paid-up capital of the said company.
The amount of the shares fixed by any bank-company shall, in total, not exceed 10 (ten) per cent of its whole obligations, the act said.