• Thursday, Oct 17, 2019
  • Last Update : 01:42 am

Bond, debenture investment limit halved

  • Published at 12:29 am April 6th, 2017
  • Last updated at 12:30 am April 6th, 2017
Bond, debenture investment limit halved
Bangladesh Bank has lowered the limit of investment in a single company’s bond or debenture by half to reduce the banks’ risky investments. The reduced limit of investment is 5% against current 10% from the banks’ total amount of paid-up capital, share premium, statutory reserves and retained earnings. The central bank has issued a circular in this regard on Wednesday stating, “from now, bank-companies cannot invest in a single company’s bond or debenture from the total amount of paid up capital, share premium, statutory reserve and retained earnings.” The circular signed by BB General Manager Abu Farah Md Naser also said: “Bangladesh Securities and Exchange Commission will have to approve the bond or debenture investment.” But the sub-debt instrument of the banks and companies will not be under the circular. Previously, the investment of limit was fixed at 10%, as per section 26 (ka) of Bank Company Act (Amendment) 2013. Recently, Finance Division rejected the proposal of issuing bonds worth Tk4,100 crore for three state-run banks including BASIC Bank to meet their capital shortfalls.