AppId is over the quota
Dhaka, Oct 23 (bdnews24.com) ? The Bangladesh Association of Banks chief has assured investors that there is no scope of the market 'plummeting' after revealing the association's move to increase bank investments in the market.
BAB chairman Nazrul Islam Mazumder gave the assurance after declaring the formation of a 'Market Stabilisation Fund' in a press briefing following a meet at the associations Gulshan headquarters on Sunday.
The investors have been demonstrating over the past few weeks and calling for stimulation measures after indices plunged to lows continuously since last month.
The announcement came after weeks of discussions on the issue as ministers, regulators and stock brokers sought to end the protests. The central bank urged commercial banks to increase their investments.
Nazrul said, "Banks can invest up to 10 percent of their liabilities in the capital market. The central bank governor has assured us about investing. Many have started investing. There is no scope of the market falling now."
Despite the 10 percent ceiling, the average investments by the banks until September stood at around three percent.
Also the chairman of Exim Bank, Nazrul said, "We can invest up to Tk 450 to 500 billion if we invest 10 percent completely."
He added that the limit of the MSF was not Tk 50 billion and it could be increased if needed. The fund will initially start off with Tk 10 billion.
"We have decided in principle to make the investments as soon as possible after receiving approval from the central bank and the share market regulator."
"We hope the fund, which we call Market Stabilisation Fund, will make a huge positive impact on the market," said Mazumder.
The bank-owners' platform chief also said 20 banks will contribute Tk 200 million each to this fund. Besides them, insurance association and listed companies will subscribe to the fund to participate.
The announcement comes only two days after a platform of top bank executives, Association of Bankers, Bangladesh, said they will start investing in the capital market from Sunday to bolster the sagging market.
The BAB chief said, "This fund is different from that step. The banks will invest in line with their agenda. This fund will run on a separate track."
Responding to queries about whether this fund will come under the 10 percent limit imposed by the central bank, Nazrul said that they will hold talks with the governor over the matter and will urge hiking the ceiling to 15 percent.
"We are seeing that the stock market has become a burden for the country. It has to be fixed. This fund aims at stabilising the market," he added.
Federation of Bangladesh Chambers of Commerce and Industries (FBCCI) declared forming this fund on Sep 29.
"It is the same fund. Only the banks are playing a key role," Nazrul pointed out.
FBCCI also said that the fund will buy up the credit from margin loan debtors who are unable to sell their shares, giving a certificate in return which will be tradable in the stock market. The portfolio against margin loan will be transferred to the fund with the consent of the debtor and the creditor. The creditor will be issued with a certificate equivalent to the fund's units plus an added premium. These units will be tradable in the stock market.
When asked whether the FBCCI declaration will be implemented, Bangladesh Association of Publicly Listed Companies (BAPLC) president Salman F Rahman said, "There is a scheme like that. Let's wait until the fund starts working."
bdnews24.com/rb/mi/rn/1731h
Source: bdnews24.com
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