BB, BSEC to work closely for capital mkt stability

The central bank and the securities regulator have decided to work closely for ensuring stability in the country's capital market.
The decision was taken at a meeting of the senior officials of the Bangladesh Securities and Exchange Commission (BSEC) held at the Bangladesh Bank (BB) Wednesday with BB Deputy Governor Abu Hena Mohammad Razee Hassan in the chair.
According to the decision, the investment of banks in the capital market will be adjusted in line with the Banking Companies (Amended) Act 2013 without hampering the capital market growth.
"We've decided to strengthen our coordination for the betterment of the share market," a BB senior official told the FE after the meeting.
He said developing bilateral relationship between the two regulators for ensuring stability in the capital market is an ongoing process.
"As part of the decision, we'll meet regularly to strengthen coordination between the two regulatory bodies," the central banker explained.
The meeting also discussed different issues including the implementation of rules and regulations relating to share market exposures by the banks in line with the Banking Companies Act.
Earlier on February 25 last, the BB asked the banks to limit their total investment in the capital market on a consolidated basis along with the existing solo one to minimise risks.
Under the new provisions, the market value of the total investment of a banking company in the capital market on a consolidated basis will not exceed 50 per cent of the sum of its consolidated paid-up capital, balance in share premium account, statutory reserve and retained earnings as stated in the latest audited financial statements.
The banks have also been asked for taking necessary measures to bring down their excess over limit investment in the capital market gradually by July 21, 2016 on both slow and consolidated basis.
Besides, the banks will have to bring down their overall capital market investment within 25 per cent of the total capital by July 21, 2016 to minimise risks in investment portfolios.
"We've issued the instructions in accordance with the Banking Companies (Amended) Act 2013 aiming to improve the financial health of the banks through minimising risks," another BB official noted.  
The central bank has already intensified its monitoring and supervision of investment in the share market by the commercial banks aiming at avoiding any unwanted situation in future.