Guideline needed to boost investment in stock markets : Experts
Reza Mahmud :
In a bid to enhance investment in the stock markets of the country, necessary guidelines are needed besides relaxations of rules for special investment fund for banks, experts and economists stressed.
To boost liquidity in the capital market, the government established a special fund of Tk 200 crore for each scheduled bank in February 2020. Under specific guidelines, banks are allowed to invest this fund in the capital market.
When contacted, eminent economist, Professor Dr. Muhammad Mahbub Ali told The New Nation on Wednesday, “Guidelines needed for banks, especially for Islami banks, to invest it’s fund to the stock markets. Such things will boost investment in the stock markets.”
The expert said, the government also has to create debt fund for the investors especially for the banks to invest the capital market easily.
Sources said, in a recent meeting on the capital market held at the Ministry of Finance, chaired by Dr. Anisuzzaman Chowdhury, Special Assistant to the Chief Adviser, banks proposed extending the fund’s tenure and relaxing the investment rules. However, no final decision has been made yet, according to sources in the Financial Institutions Division of the ministry.
When contacted, BSEC Director and Spokesperson Md. Abul Kalam said a meeting regarding the capital market was held at the Ministry of Finance recently, and the BSEC Chairman attended as the commission’s representative.
Sources at the meeting said that discussions included extending the tenure of the Tk 200 crore special fund for capital market investment. Already, after the fund’s term expired in February this year, it has been extended to December 31, 2026.
According to the fund’s investment policy, banks are not allowed to purchase more than 10% of total units of closed-end mutual funds and more than 15% of total units of open-end mutual funds. Additionally, banks can only invest in closed-end mutual funds that have provided at least 5% cash dividends for the past three consecutive years, and in open-end mutual funds with net asset values (NAV) above face value that have also paid a minimum 5% cash dividend over the past three years.
The meeting discussed the possibility of easing these conditions. Detailed discussions were held on simplifying the entire process by relaxing the fund’s investment policy to encourage greater investment in the capital market and mutual funds.
The meeting also focused on other issues, such as listing fundamentally strong companies in the capital market, boosting investor confidence, and promoting the development of mutual funds.
Officials from the Financial Institutions Division confirmed that discussions were held on extending the fund’s duration and easing its investment rules. However, no concrete decision has been made yet. Banks have been asked to submit written proposals. Once those are received, further consultations will be held with the central bank and other stakeholders before a final decision is made.
Others present at the meeting included Bangladesh Securities and Exchange Commission (BSEC) Chairman Khondker Rashed Maksud, Financial Institutions Division Secretary Nazma Mobarek, Bangladesh Bank Deputy Governor Nurun Nahar, Additional Secretary of the Financial Institutions Division Md. Saeed Kutub, and managing directors of Sonali Bank, Investment Corporation of Bangladesh (ICB), United Commercial Bank (UCB), Bank Asia, and Eastern Bank.