DSE asks merchant banks to restrict loan outflows
Wednesday, 11 July 2007
The Dhaka Stock Exchange (DSE) Monday asked the merchant bankers to extend loans cautiously to their clients so that the market remained unaffected, reports bdnews24.com.
The appeal was aimed especially at banks and non-bank financial institutions (NBFIs) that held merchant banking licences.
"We wanted stakeholders to play a responsible role in maintaining an ordered and disciplined market," Salahuddin Ahmed Khan, chief executive of DSE, told the news agency.
The appeal came amid the growing engagement of banks and NBFIs in merchant banking in extending loans to stock investors through their merchant banking wings.
In the absence of any set rules merchant banks can currently provide as much credit as they wish to their clients, which in some cases is as much as five times greater than the invested money of clients.
The DSE made the plea at a luncheon meeting, joined by senior officials of the Securities and Exchange Commission (SEC), merchant bankers especially from banks and NBFIs, mutual fund operators and DSE members. About 50 people attended the meeting.
"It is a regular meeting. We hope to hold it on a regular basis for the interest of investors," Khan said.
The DSE also called upon banks and NBFIs to float mutual funds to increase market depth and reduce risks of small investors.
Yawer Sayeed, chief executive of AIMS of Bangladesh that manages about Tk 700 million in funds, said they also urged the regulator to relax quantitative restrictions on investment.
MFs at present face percentage restrictions when investing in the banking and NBFI sectors.
The appeal was aimed especially at banks and non-bank financial institutions (NBFIs) that held merchant banking licences.
"We wanted stakeholders to play a responsible role in maintaining an ordered and disciplined market," Salahuddin Ahmed Khan, chief executive of DSE, told the news agency.
The appeal came amid the growing engagement of banks and NBFIs in merchant banking in extending loans to stock investors through their merchant banking wings.
In the absence of any set rules merchant banks can currently provide as much credit as they wish to their clients, which in some cases is as much as five times greater than the invested money of clients.
The DSE made the plea at a luncheon meeting, joined by senior officials of the Securities and Exchange Commission (SEC), merchant bankers especially from banks and NBFIs, mutual fund operators and DSE members. About 50 people attended the meeting.
"It is a regular meeting. We hope to hold it on a regular basis for the interest of investors," Khan said.
The DSE also called upon banks and NBFIs to float mutual funds to increase market depth and reduce risks of small investors.
Yawer Sayeed, chief executive of AIMS of Bangladesh that manages about Tk 700 million in funds, said they also urged the regulator to relax quantitative restrictions on investment.
MFs at present face percentage restrictions when investing in the banking and NBFI sectors.