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BSEC fixes minimum credit balance for receiving interest income

FE Report | June 23, 2021 00:00:00


The securities regulator has revised the rules regarding the distribution of net interest incomes that come from consolidated customers' accounts (CCA) maintained by stock brokers.

The revised directive was issued on Monday in a bid to ensure more transparency in maintaining the CCAs along with removing some complexities occurred while distribution of interest income among the clients of stock brokers.

In its directive, the Bangladesh Securities and Exchange Commission (BSEC) included eligibility criteria of getting the interest income from the CCA.

An investor or customer will be eligible to receive interest income if his minimum credits balance worth Tk 0.1 million remains in a CCA continuously at least for one month in a financial year, the directive said.

Besides, an investor will not be allowed to receive interest income unless his interest income worth at least Tk 500.00 is accrued for a customer's account in a financial year.

Mohammad Rezaul Karim, a BSEC spokesperson, said the directive has been revised to remove some complexities in distribution of interest income from the CCAs.

"Many investors have a large number of BO (beneficiary owner's) accounts with very insufficient amount of funds. The brokers face difficulties in case of distributing interest income against those accounts. That's why the BSEC has set minimum credit balance for receiving interest income," Mr. Karim said.

He said many stock brokers discourage investors to make fresh investments amid down trend of the market despite the funds of the second ones remain idle in the CCAs.

"In that case, stock brokers avail the benefit of their customers' accounts. The revised directive will contain such tendency adopted by many stock brokers," Mr. Karim said.

In its revised directive, the BSEC has also defined the ways of calculating the distributable net interest income earned from the CCAs.

Annual net interest income distributable to thecustomers' account of a broker shall be calculated by deducting annual account maintenance expenses, bank charges, and other charges from the annual gross interest income earned in the CCA.

A stock broker will distribute the net interest income to its every eligible customer based on the weighted average credit balance (day-end basis) of the individual customer's account for the year by applying effecting rate of interest within 30 days of end of each financial year.

"Besides, no money of the CCA shall be deposited in any fixed deposit account," according the BSEC's directive.

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