The government will extend the deadline for cutting banks’ investment exposure in the stock market by two years more.
“Banks will get another two years for bringing down their investment exposure in the stock market,” said Finance Minister AMA Muhith while briefing about the outcome of the first day meeting of Bangladesh Development Form (BDF) held in the city yesterday.
“We have already drafted it,” said the minister. The Finance Minister’s announcement came soon after the top brokers ata meeting recommended for the extension of the deadline for bringing down banks’ investment exposure in the stock market for stabilising the market.
As per rules, the banks will have to bring down their stock market exposure to 25% of their capital by June next year. If allowed, banks will get until July 2018 lowering their exposure to the permissible limit.
Previously, it was 10% of a bank’s liabilities or deposits.
Earlier, speakers ata meeting with the Dhaka Stock Exchange, stakeholders including brokers and merchant banks, fear that they might have to sell a sizeable amount of shares, which could be good enough to create a crash like in 2011, if the banks have to bring down their investment to the limit set by Bangladesh Bank.
According to the Bangladesh Bank, about 27 banks have 25% investment of their capital in the stock market as of now.