The central bank has decided to strengthen monitoring of commercial banks' exposure to share market with a view to avoiding recurrence of an unwanted situation, officials said.
Under the latest move, the banks will have to submit their reports on fresh investment in the capital market to the Bangladesh Bank (BB) on weekly basis, mentioning daily transactions separately.
Currently, the banks are eligible to submit such weekly reports to the Department of Off-site Supervision (DOS) of the central bank on gross transactions basis without mentioning daily transactions separately.
The report must be submitted to the central bank's concerned department on Thursdays within 5.00 PM by e-mail, according to a communication, issued by the BB Monday.
"We've intensified our monitoring and supervision on banks' investment in the capital market through revising reporting format," a BB senior official told the FE.
Under the revised reporting format, the banks will have to furnish information about total fresh investments in the stock market along with total fresh fund provided to their subsidiaries.
Besides, the banks will need to provide information about the margin loans made available to the customers by the subsidiaries on daily basis.
The central bank has laid emphasis on the issue of minimising risks of the banks, according to the official.
"The banks will have to report on each and every transaction relating to fresh investment in the capital market properly," the central banker said while replying to a query.
He also said the central bank wants to know about the banks' actual investment trend in the share market.
The BB's latest move comes against the backdrops of a sharp rise in the prime index of the Dhaka Stock Exchange (DSE) in recent days. DSEX gained 250 points or 4.23 per cent in the just one month as it was 5,901 points on August 10 and reached at 6,151 points Monday, the DSE data showed.
The market rose sharply on the back of large-cap shares, especially heavyweight banking sector which led to the rise in daily turnover and the list of gainers in recent weeks, according to the market operators.
They also said the increase in idle liquidity in the banking sector opened up fresh opportunity for banks to invest more in the stock market through lending to merchant banks.
The banks are now allowed to invest of 25 per cent of their total capital in line with the Banking Companies (Amended) Act 2013.
According to the Banking Companies Act 1991 (Amended in 2013), total capital comprises four components: paid-up capital, balance in share premium account, statutory reserve, and retained earnings, as stated in the latest audited financial statements.
While calculating total investment in the capital market different components, including all types of shares, debentures, corporate bonds, mutual fund units, and other securities, will be considered, it added.