Despite holding enough liquidity, financial institutions could not inject fund in the capital market due to the Bangladesh Bank’s market price-based valuation of banks’ investment in the stock market, said DBA president Mostaque Ahmed Sadeque at a press briefing on Tuesday.
The DSE Brokers Association of Bangladesh on Tuesday held the press conference following an emergency meeting with DSE stakeholders over the recent market fall.
Mostaque said that the liquidity crisis in the capital market could be mitigated if the central bank relaxed the exposure limit.
Regarding the DSE’s share sales to a strategic partner, he said that the regulator would give its decision on the matter soon.
DBA and Bangladesh Merchant Bankers Association on February 5 sent a number of proposals to the BB to recover the stock market from the recent panic-driven bearish trend, he said.
He said, ‘We requested the BB to calculate exposure limit for banks and NBFIs on solo basis.’
A bond, shares of non-listed companies, deventures and preferential shares should be excluded from the calculation of exposure limit, he said.
Calculation of single party exposure related to the capital market institutions under jurisdiction of the BB should be on cost basis instead of mark-to-mark basis, he said.
The Investment Corporation of Bangladesh as a government organisation should be exempted from the single party exposure regime and should be allocated more fund allowing it to invest more to support the capital market, he said.
The effectiveness of advance-deposit ratio circular should be stopped for the time being.
He, however, said that the BB was reluctant to mitigate the problem.
BMBA president Nasir Uddin Chowdhury said that the financial wings of state-owned banks should come forward to reduce the liquidity shortage in the capital market by injecting fund as they enjoy lower ADR facility.
Want stories like this in your inbox?
Sign up to exclusive daily email
More Stories from Stocks