BB to relax banks\\\' capital mkt reporting

The central bank is set to relax its reporting requirement on capital market activities of banks to facilitate the stock market, a top central banker said Monday.
Under the revised provisions, the banks will be allowed to submit their consolidated reports on two-week capital market activities instead of the existing weekly basis to the Department of Off-site Supervision of Bangladesh Bank (BB).
Currently, the banks are allowed to submit their consolidated reports on daily capital market activities on each Thursday instead of daily basis on the same day earlier.
The decision was taken at a coordination meeting of the watchdogs -- the Bangladesh Bank (BB), the Bangladesh Securities and Exchange Commission (BSEC), the Office of the Registrar of Joint Stock Companies and Firms and the Insurance Development and Regulatory Authority (IDRA), Micro-credit Regulatory Authority (MRA), Department of Cooperatives (DoC) and Bangladesh Telecommunication Regulatory Commission (BTRC) -- held at the central bank headquarters in Dhaka Thursday last with BB Governor Atiur Rahman in the chair.
The decision came against the backdrop of bearish trend in the stock market as the prime index of the Dhaka Stock Exchange dropped by nearly 320 points or 6.67 per cent to 4536.05 on Monday from 4845.96 on October 01 last.
"We've decided to relax the reporting requirement aiming to facilitate the country's stock market for achieving a sustainable stability in the capital market," BB Deputy Governor SK Sur Chowdhury told the FE.
The deputy governor also said the central bank is always trying to adopt capital market-friendly policy since it is an essential component of the country's financial stability.
Talking to the FE, another BB official said the central bank will communicate the latest decision on capital market exposure reporting requirement to the banks shortly.
"Actually, we're now working on the issue," the central banker explained.
He also said the banks are now adjusting their capital market portfolios in line with the Banking Companies (Amended) Act 2013.
All banks' capital market exposure came down to 35 per cent in September last from around 50 per cent earlier due mainly to increase in their eligible capital components, he said.
"Banks' capital in the country rose to Tk 710 billion now from Tk 490 billion two years before," the central banker explained.
According to the existing Banking Companies (Amended) Act, total capital comprises four components -- paid-up capital, balance in share premium account, statutory reserve and retained earnings as stated in the latest audited financial statements.
While calculating the banks' total investment in capital market, all types of shares, debentures, corporate bonds, mutual fund units and other securities, owned by them, will be considered.
The BB earlier asked the commercial banks to bring down their overall capital market investment within 25 per cent of total capital by July 21, 2016 to minimise risks in investment portfolios.
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