3 FCBs want BB nod to float zero-coupon bonds
Sunday, 23 March 2008
Siddique Islam
Three foreign commercial banks (FCBs) have sought permission from the central bank to float zero-coupon bonds worth Tk 9.0 billion aiming to increase liquidity and strengthen their financing capacity.
The Citibank N.A. has submitted an application to the Bangladesh Bank (BB) seeking permission to issue zero-coupon bond worth Tk 5.0 billion while the Standard Chartered Bank (SCB) and the Hongkong and Shanghai Banking Corporation (HSBC) Limited to float the bond amounting to Tk 2.0 billion each.
"We are now working on it. We will issue no-objection certificates to the banks concerned after fulfillment of our requirements," a BB senior official told the FE.
He also said the Securities and Exchange Commission (SEC) will issue final approval to the banks for floating the bonds after the issuance of certificates by the central bank.
The zero-coupon bond has gradually become a popular investment tool in the country's financial market due mainly to income tax exemption on earning from the product, they added.
The government has already exempted the income, generated from zero-coupon bonds, from payment of income tax as it is considered as an alternative source of financing investment.
In February last, the BB has given two non-banking financial institutions (NBFIs) permission to float two zero-coupon bonds and one asset-backed zero-coupon bond.
Currently, the banks, NBFIs, insurance companies and corporate entities are mostly purchasing such bonds under private placements.
"The new bonds will be able to bring a positive impact on the country's bond market," another BB official told the FE, adding that the central bank will meet the authorities concerned to discuss the issues relating to permission on floatation of such bonds.
On February 17 last, a joint review meeting of the BB, the SEC, the Registrar of Joint Stock Companies and Firms (RJSC) and the Directorate of Insurance decided to discuss the tax related issue with the National Board of Revenue (NBR) about giving permission to float the bond by private companies.
The regulatory bodies took the decision when at least two private companies submitted their proposals to the central bank seeking permissions to float zero-coupon bonds.
"We have already sent a letter to the SEC to arrange a joint meeting to take decision on the matter," the official said, adding that the central bank will take final decision regarding issuance of zero-coupon bonds by private companies after discussion with the NBR.
Three foreign commercial banks (FCBs) have sought permission from the central bank to float zero-coupon bonds worth Tk 9.0 billion aiming to increase liquidity and strengthen their financing capacity.
The Citibank N.A. has submitted an application to the Bangladesh Bank (BB) seeking permission to issue zero-coupon bond worth Tk 5.0 billion while the Standard Chartered Bank (SCB) and the Hongkong and Shanghai Banking Corporation (HSBC) Limited to float the bond amounting to Tk 2.0 billion each.
"We are now working on it. We will issue no-objection certificates to the banks concerned after fulfillment of our requirements," a BB senior official told the FE.
He also said the Securities and Exchange Commission (SEC) will issue final approval to the banks for floating the bonds after the issuance of certificates by the central bank.
The zero-coupon bond has gradually become a popular investment tool in the country's financial market due mainly to income tax exemption on earning from the product, they added.
The government has already exempted the income, generated from zero-coupon bonds, from payment of income tax as it is considered as an alternative source of financing investment.
In February last, the BB has given two non-banking financial institutions (NBFIs) permission to float two zero-coupon bonds and one asset-backed zero-coupon bond.
Currently, the banks, NBFIs, insurance companies and corporate entities are mostly purchasing such bonds under private placements.
"The new bonds will be able to bring a positive impact on the country's bond market," another BB official told the FE, adding that the central bank will meet the authorities concerned to discuss the issues relating to permission on floatation of such bonds.
On February 17 last, a joint review meeting of the BB, the SEC, the Registrar of Joint Stock Companies and Firms (RJSC) and the Directorate of Insurance decided to discuss the tax related issue with the National Board of Revenue (NBR) about giving permission to float the bond by private companies.
The regulatory bodies took the decision when at least two private companies submitted their proposals to the central bank seeking permissions to float zero-coupon bonds.
"We have already sent a letter to the SEC to arrange a joint meeting to take decision on the matter," the official said, adding that the central bank will take final decision regarding issuance of zero-coupon bonds by private companies after discussion with the NBR.