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Provisioning rules for bank loans to cap market relaxed

February 03, 2023 00:00:00


FE REPORT

Bangladesh Bank (BB) has relaxed the provisioning rules for bank loans to the brokerage houses, merchant banks and stock dealers.

The banks will have to maintain a general provision of 1.0 per cent on the unclassified amount of loans with effect from March 30 next, according to a circular issued on Thursday.

The banks now maintain this provision at a rate of 2.0 per cent.

The move is expected to increase the fund flow to the capital market as the banks would feel encouraged to pump more money into the market.

Executives at the stock brokerage houses appreciated the central bank's decision, expressing the hope that the banks would invest more in the capital market through their subsidiaries or stock dealers and others.

Mr Sajedul Islam, senior vice president at the DSE Brokers Association of Bangladesh, said this will create a level-playing field in the financial market. "It'll help increase the volume of investment in the market."

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