Limit made not applicable to bonds, Sukuk and debentures

Commercial banks get wider scope in stock-market investment under an updated set of guidelines extending their bourse exposure in a bid for stimulating sluggish stocks trade.
The Bangladesh Bank revised the guidelines for investment by the banks in the capital market with bonds, debentures and Islamic Sharia-based securities like Sukuk freed from their market-exposure limit.
In a circular issued Thursday the central bank made the change in tune with the recently amended Bank Company Act in an avowed bid for developing the bond market.
Spokesperson for the central bank Md. Mezbaul Haque said corporate bonds and debentures were on the banks' capital market-exposure limit.
"With the circular, the BB has excluded bonds, including Sukuk, and debenture from the limit. So, these will not be a part of the banks' exposure limit from now," he says about the latest spell of market deregulation.
Mr Haque, also an executive director of the BB, holds the hope that central bank's latest action will help develop the bond market creating more investment opportunities for banks in the capital market.
Contacted for his feelings about the move, managing director and chief executive officer of Mutual Trust Bank (MTB) Limited Syed Mahbubur Rahman said the revision would definitely create investment opportunity for banks in the capital market.
"But the question is would the banks have enough appetite to invest under the current context of the share market," he said, on a note of scepticism over the overall ambience of the country's capital market that passes through turns and twists.
Seeking anonymity, the deputy managing director (DMD) and head of treasury of a private commercial bank said the bank would not show any interest in investing more in this capital market where most of the blue-chip stocks remained stymied in the floor-price bounds.
Terming the capital market a strange market where prices of Z-category shares keep climbing, the executive said the banks are investing their depositors' money. So, the banks cannot take risks investing in areas where "the risk of losing money is higher".
"The investors first want to see the exit point before investing in any area. On our capital market, there is no exit point. That's why the foreign companies are reluctant to step into the market," he says.
He feels that banks would feel comfort making investment if there is investors' confidence and enough liquidity. "But our market lacks both."

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