BB extends time for banks to Dec 31
Thursday, 2 December 2010
FE Report
The Bangladesh Bank (BB) is set to extend the deadline by one more month for formation of subsidiary companies by commercial banks, which is compulsory for merchant banking operation.
According to the extended timeframe, commercial banks have to form subsidiary companies for operating merchant banking by December 31, 2010.
The central bank's decision to extend the timeframe came following failure of a number of commercial banks to form these subsidiary companies, BB officials said. The extended time is aimed at facilitating the banks to form subsidiaries.
A total of 49 commercial banks are now operating in the country.
Of the total, a good number of commercial banks have already formed subsidiaries, while some them have opened their merchant banking wings.
Earlier, the central bank made the introduction of merchant banking mandatory for banks to avert violation of section 26(2) of the existing Bank Companies Act.
Under the existing act, no banking company is allowed to hold shares of other companies whether as pledge or mortgage or as exclusive owner of an amount exceeding, namely, 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 its paid-up capital.
The Bangladesh Bank (BB) is set to extend the deadline by one more month for formation of subsidiary companies by commercial banks, which is compulsory for merchant banking operation.
According to the extended timeframe, commercial banks have to form subsidiary companies for operating merchant banking by December 31, 2010.
The central bank's decision to extend the timeframe came following failure of a number of commercial banks to form these subsidiary companies, BB officials said. The extended time is aimed at facilitating the banks to form subsidiaries.
A total of 49 commercial banks are now operating in the country.
Of the total, a good number of commercial banks have already formed subsidiaries, while some them have opened their merchant banking wings.
Earlier, the central bank made the introduction of merchant banking mandatory for banks to avert violation of section 26(2) of the existing Bank Companies Act.
Under the existing act, no banking company is allowed to hold shares of other companies whether as pledge or mortgage or as exclusive owner of an amount exceeding, namely, 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 its paid-up capital.