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The Financial Express

23 banks pump Tk 143.6b into stocks

| Updated: September 05, 2021 15:53:15


Investors react while monitoring stock price movements on computer screens at a brockerage house in the capital city — FE/Files Investors react while monitoring stock price movements on computer screens at a brockerage house in the capital city — FE/Files

Some 23 listed banks, out of 32, have made a consolidated investment worth Tk 143.63 billion in the country's stock market as of July 31 last.

According to the Bangladesh Securities and Exchange Commission (BSEC), the banks made investments ranging from Tk 2.67 billion to Tk 10.95 billion.

The BSEC officials said those banks had more scope of investing in the stock market as their investments were still below the stipulated investment ceiling.

On the other hand, the officials of the Bangladesh Bank (BB) said the banks were not bound to comply with the full investment ceiling set in existing provisions.

As per the existing provisions, the market value of total investment of a banking company in the stock market on a consolidated basis cannot exceed 50 per cent of the sum of its consolidated paid-up capital, balance in share-premium account, statutory reserves and retained earnings as stated in the latest audited financial statements.

The BSEC information said Al-Arafa Islami Bank made a consolidated investment worth Tk 10.95 billion, which is 48.99 per cent of the bank's consolidated capital, according to the BSEC.

The City Bank made a consolidated investment of around Tk 11.09 billion, which is 42.46 per cent of the company's consolidated capital.

The consolidated investment of BRAC Bank stood at Tk 10.07 billion, which is 23.49 per cent of the consolidated capital.

United Commercial Bank made a consolidated investment of Tk 10.48 billion, which is 31.86 per cent of the company's consolidated capital.

"On receipt of data, we have observed that the investments of many listed banks are much below the stipulated limit," said Dr Shaikh Shamsuddin Ahmed, a BSEC commissioner.

"Those 23 banks have a wide range of scope for making further investments in the stock market."

He said the banks should come forward with more investments as they were getting due support from the stock market.

"We think the central bank should look into whether the banks are investing in the stock market in line with the rules," said BSEC commissioner Ahmed.

Asked, a BB official said they had set the maximum limit for investments to be made by the banks in the stock market.

"Now, the banks will fix their own limit of investments to be made in the stock market. We cannot put pressure on them to invest in line with the highest limit," said the BB official.

The central bank can intervene only when a bank breaches the provision by investing beyond the stipulated limit, he added.

Of other banks, the consolidated investment of Eastern Bank was 8.67 billion, Prime Bank Tk 8.58 billion, NCC Bank Tk 7.10 billion, Islami Bank Bangladesh 6.72 billion, Mercantile Bank Tk 6.37 billion, Trust Bank Tk 6.06 billion and Mutual Trust Bank Tk 5.61 billion, as of July 31 last.

The banks are also required to comply with the investment ceiling on a 'solo basis'. In that case, the banks are allowed to invest the maximum 25 per cent of their total capital in the share market on a 'solo basis'.

The investments made by 23 listed banks are also below 25 per cent on a solo basis.

Of the banks, the solo investment of Al-Arafa Islami Bank was 24.92 per cent, Bank Asia 24.78 per cent, One Bank 23.47 per cent, Uttara Bank 21.95 per cent, Eastern Bank 20.66 per cent, Shahjalal Islami Bank 20.39 per cent and Standard Bank 20.02 per cent, as of July 31 last.

The BSEC officials, however, did not say anything about investments made by other listed and non-listed banks.

They said the investment status of other banks was not satisfactory.

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