The securities regulator has asked UCB Capital Management to explain whether its 'sudden' decision of stopping margin loan disbursement against many securities of insurance sector was 'lawful' or not.
In this regard, the Bangladesh Securities and Exchange Commission (BSEC) served a show notice on UCB Capital Management, a TREC holder of Dhaka Stock Exchange (DSE), on Tuesday.
BSEC spokesperson Mohammad Rezaul Karim has confirmed the issuance of the show cause notice served.
The show cause notice came following a news regarding the company's decision of not disbursing margin loans against the shares of '20' insurance companies.
"The company will have to explain whether its agreement signed with the clients has any clause of stopping margin loan distribution against marginable securities," said Mr. Karim
He said the company has made a number of insurance companies non-marginable securities.
Asked, whether a lender has the authority of disbursing margin loan in accordance with their own decision, Mr. Karim said the lender can disburse such loan in accordance with their decision.
"But we have to know about the company's margin loan agreement signed with their clients. The company will have to explain whether the sudden decision of stopping margin loan disbursement was lawful or not," said Mr. Karim.
Asked, the managing director of UCB Capital Management Mohammad Rahmat Pasha said the news regarding stopping disbursement of margin loans against the shares of 20 insurance companies was 'fabricated'.
"We have a list of 104 marginable securities, including insurance ones, selected based on the report of our research team. We disburse margin loans on regular basis in line with the securities rules," Mr. Pasha told the FE.
He said their company disbursed margin loans worth Tk 19.70 million on Monday and they will continue disbursement of loans.
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