Central bank agrees to exclude bank bond investments from exposure to capital markets

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The Bangladesh Bank, the money market regulator, has agreed to exclude bond investments by banks from their calculation of capital market exposure.

The decision was made on Tuesday at a meeting with the stock market regulator, the Bangladesh Securities and Exchange Commission (BSEC).

Deputy central bank governor AKM Sajedur Rahman Khan and other officials attended the meeting.

In a press conference after the meeting, BSEC Commissioner Dr Shaikh Shamsuddin Ahmed said the central bank responded positively to BSEC’s proposal to base the calculation of banks’ exposure on the capital market on the cost price of securities – instead of the current market valuation method.

In the stock markets of other countries around the world, even India and Vietnam, a bank’s investments are valued at the purchase price, but only in Bangladesh are they valued at the market price. , did he declare.

“The Bangladesh Bank would also allow banks to comply with the corporate governance code that would allow banks to have 20% independent directors and form nomination and remuneration committees,” Dr Shamsuddin said.

He said they explained that adhering to a corporate governance code would help ensure good governance of the bank and Bangladesh Bank officials agreed.

The central bank had said that no bank would be able to pay dividends if it had accumulated losses. According to the BSEC, however, dividends may be paid if the accumulated losses comply with international accounting standards. This standard is followed all over the world, Shamshuddin said.

He said the Bangladesh Bank has assured the stock market regulator that it will take appropriate action if such an issue is brought to the attention of the central bank.

The BSEC commissioner said the Bangladesh Bank objected to the use of certain terms in the Capital Market Stabilization Fund Act. “We will issue another circular clarifying the law. This will remove any ambiguity.”

Shamshuddin expressed hope that the central bank would make the necessary changes in the coming days.

A central bank official, on condition of anonymity, said: “Unclaimed dividends from shareholders can be sent to the Capital Market Stabilization Fund. The central bank will seek to quickly resolve any issues in this regard. Banks will be able to send unclaimed dividends. by December.

“The necessary steps will also be taken to comply with international accounting standards in the declaration of dividends. But the law must change for other things. In addition, these issues require further discussion.”

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