ABB to urge banks to invest fresh funds in stock market

---

Siddique Islam The Association of Bankers, Bangladesh (ABB) will urge its member banks to invest fresh funds in stock market after fulfilling the central bank's requirements. "We'll meet within this week in this connection," ABB Chairman K Mahmood Sattar told the FE Monday, adding that the ABB has started persuading its members to make a formal announcement from the meeting. The ABB is a representative organisation of the chief executive officers (CEOs) of different commercial banks. The ABB chief said they are also thinking of rescheduling margin loans to create a 'comfort zone' for their subsidiaries, brokerage houses and merchant banks. The senior banker's observation came after extending the time-frame for adjustment of single borrower exposure limit by the commercial banks by one year for financing the operations of their subsidiaries, brokerage houses and merchant banks. Under the amended provision, the banks will have to adjust the excess amount of their loans over the single borrower exposure limits for their respective subsidiaries by December 31, 2012, instead of December 31 this year. "It's the best time for long-term investment in stock market," Mr Sattar said, adding that long-term means one to two years. Talking to the FE, ABB vice-chairman Mohammed Nurul Amin also said it is the time for investment in the share market by individual, institutional and foreign investors along with the banks, considering the overall situation. He also said the banks may invest fresh funds in the market on their own consideration. "Al least 36 commercial banks, out of 47, are still allowed to invest in the market," Mr Amin said, adding that 11 commercial banks have already exceeded their capital market investment limit. Currently, the banks are allowed to invest maximum 10 per cent of liabilities in the capital market, according to the central bank instructions. "Of course, there is a scope to invest in the capital market by the commercial banks, because the average capital market exposure of all banks stands at around 3.0 per cent of their total liabilities this month. But it will depend on their own judgment," a senior official of the Bangladesh Bank (BB) told the FE. He also said the central bank has already assured all other regulatory bodies concerned of all-out cooperation in line with the existing rules and regulations to bring back stability in stock market. The market capitalisation of all the listed issues with the country's bourses witnessed a massive decline in recent months, leading to a sharp and continuous fall in the indices. DGEN, the benchmark index of the Dhaka Stock Exchange (DSE), came down to 5423.92 point Monday from the highest of 8918.51 point on December 05 last.