Banks can now invest more in stock market

Bonds, debentures and Shariah-based products like sukuk from now on cannot be shown as a component of banks' stock market exposure, according to a circular of Bangladesh Bank yesterday. 

The change has been brought about through amendments to Bank Company Act, 1991 this year, said the central bank. 

Changes have accordingly been brought about in the way the Statement Regarding Total Investment in Capital Market (TICM) needs to be provided and scheduled banks are asked to take note of it when submitting the TICM to the BB, it added.

This will give scheduled banks the chance to increase investment in the stock market, said a top official of a scheduled bank, preferring anonymity.

There is a regulatory limit to a bank's stock market exposure and with bonds, debentures and Shariah-based products no longer falling under it, more can be directly invested in the stock market, he said.

The current situation of the stock market does not emanate the assurance based on which one can gain the confidence to invest in it. This is the primary reason many banks do not invest in the stock market, he said.

So, their investment will not rise until the confidence grows among them, he added.