Active BO accounts down 7.25pc in 2019
Mohammad Mufazzal | Sunday, 5 January 2020
The number of active BO (beneficiary owner's) accounts declined 7.25 per cent in the just concluded calendar year from the number of accounts observed at the end of previous year.
The officials familiar with the matter said a good number of BO accounts were closed in 2019 due to non-payment of maintenance fees and a regulatory move taken to ensure compliances.
The number of active BO accounts stood at 2.57 million on December 30, 2019 whereas the number of accounts was 2.78 million at the end of 2018.
As a result, the number of active BO accounts dropped by 7.25 per cent or 201,634 in 2019 from the figures in December, 2018.
An official concerned said a good number of BO accounts were closed after June, 2019 following a circular issued by the Bangladesh Securities and Exchange Commission (BSEC) to move irregularities occurred during opening accounts.
On June 30, 2019 the securities regulator asked the Central Depository Bangladesh Limited (CDBL) to submit a report on the compliances maintained in opening investors' BO accounts.
The regulator issued directive as many BO accounts were opened using same national ID number, mobile number and bank account.
A CDBL official said they will submit the compliance report to the BSEC soon.
"The depository participants (DPs) closed many unlawful BO accounts following the BSEC's directive. That's why the number of active BO accounts declined moderately at the end of 2019," the CDBL official said preferring anonymity.
Of 2.57 million accounts found active as of December 30 last, above 1.63 million accounts are individual while the remaining 932,483 accounts are opened jointly in the name of male and female.
Of total number of active accounts, the non-resident Bangladeshis own 145,516 accounts opened to conduct share transactions or to apply for IPO (initial public offering) shares.
According to the CDBL, over half the active BO accounts, however, exist in name only.
Those accounts have no role in daily share transactions as they have either zero balance or have never been used in share trading.
This has been happening over the last five years, the CDBL sources said.
According to CDBL data as of June 30, 2019 more than 50 per cent or 1.53 million active BO accounts were not used in any transaction of shares of the listed securities.
The number of BO accounts with share balances was 1.59 million in 2015, 1.53 million in 2016, 1.29 million in 2017, 1.30 million in 2018, and 1.27 million as of June 30 2019.
Some stock brokers said a significant number BO accounts are maintained by investors to apply for IPO shares.
Currently, an investor has to pay Tk 450 per annum to keep his/her BO account active.
Of Tk 450, Tk 200 goes to the public exchequer, Tk 100 to depository participants (DPs), Tk 100 to the CDBL and the remaining Tk 50 to the BSEC.
The number of BO accounts reached its peak at around 3.4 million in the fiscal year 2010-11, the year of market bubble-burst, as people, lured by the booming share prices, then had rushed to open accounts with different brokerage houses.
In December, 2019 the BSEC took an initiative of introducing SMS alerts on updates of BO accounts.
After introduction of the service, investors automatically will get information regarding opening the BO accounts and its link accounts.
Investors will also be informed of any changes in the name of account holders, bank accounts, name of banks, mobile numbers, closing of accounts and conversion of margin accounts into non-margin accounts.