The recent instruction from the Bangladesh Securities Exchange Commission (BSEC) to deposit unclaimed dividends to the Capital Market Stabilization Fund (CMSF) put them at odds with Bangladesh Bank once again.
This is the second time in two years that Bangladesh Bank and BSEC are at odds.
BSEC says that the unclaimed dividend money of the banks should be deposited in the CMSF by March 31.
On the other hand, Bangladesh Bank says that the money should be deposited in their account.
In this situation, the country's banks do not understand who they should listen to.
Following the recent stern warning by BSEC chairman, many banks have sought guidance from Bangladesh Bank in this regard.
The central bank has asked the listed banks to deposit unclaimed dividends into the central bank's account in line with a provision of the Bank Companies Act, 1991.
Seeking anonymity, an official of the central bank told Dhaka Tribune: “Recently, different banks wanted to know what they would do in case of complying with the securities regulator's order regarding deposit of unclaimed or undistributed dividends into the CMSF. So Bangladesh bank has sent letters to the banks asking them to follow the Bank Companies Act."
“The securities regulator was also informed of the provision of the bank companies act at a coordination meeting held in September 2021. Subsection 2 of section 35 of the Bank Companies Act has a provision of depositing unclaimed dividends into the account of the central bank," the Bangladesh Bank official explained.
"The central bank has no say on the mobilization of the undistributed dividend. But the banks will have to deposit the unclaimed dividend into the account of the central bank. After one year of depositing the unclaimed dividend into the Bangladesh Bank's account, the fund would be transferred to the government's exchequer on completion of some procedures," the official added.
The BSEC chairman and other top officials of the CMSF said that the fund had been formed with a good intention of supporting the market along with completing the settlements of investors' longstanding claims on dividends.
Regarding the unclaimed dividend, BSEC chairman Shibli Rubayat-Ul-Islam warned of financial penalties against the listed companies which fail to transfer unclaimed dividends to the CMSF by March 31.
On Tuesday, he said: “A number of companies were dilly-dallying in transferring the funds using various pretexts despite the fact that the fund belongs to the investors.”
“The regulator must find out the money at any cost. No one can possess the money of the investors. As a number of companies settled the unclaimed dividends after a BSEC initiative, investors’ confidence was enhanced.”
Shibli also said: “The commission will be strict regarding the fund transfer after March 31 and the commission will not extend the time after the deadline.”
In this regard, Bangladesh Bank spokesperson Serajul Islam told earlier: “One of the main responsibilities of Bangladesh Bank is to look after the interests of the depositors of the banks.”
“As part of this responsibility, various directives are issued at different times, which the banks abide by. No other government agency should stand in the way,” he added.
Mohammad Rehan Kabir, stock market researcher and analyst told Dhaka Tribune: “The capital market had seen a positive growth of 20-30% earlier last year compared to 2020. But all of a sudden, in the middle of last year, two regulatory bodies of the country got involved in a dispute.”
“If the same situation arises again, the main victims in this situation will be the general investors and good institutions. Therefore, it is necessary to solve the problem completely,” he added in a worried voice.