Bangladesh Bank has exempted the banks’ investments in an Investment Corporation of Bangladesh-issued subordinate bond from being counted as their (banks) capital market exposure.
The central bank on Tuesday issued a circular in this regard.
The circular said that the banks’ investment in a Tk 2,000-crore bond floated by ICB would not be counted as their capital market exposure.
ICB will use the fund mainly at primary and secondary markets as a market maker, and will also invest in thrust sectors of the government and PPP projects.
The bond, whose tenure would be seven years, will be fully redeemable and subordinated.
The Bangladesh Securities and Exchange Commission on July 17 allowed ICB to float the non-convertible fixed rate subordinate bond worth Tk 2,000 crore.
Only corporate bodies, financial institutions, eligible investors and funds will be allowed to subscribe the bond through private placement.
To facilitate financial institutions’ investment in the bond, ICB urged the central bank to ease the restrictions on single-party exposure and capital market exposure.
The single-party exposure rule means a bank cannot lend or deposit more than 15 per cent of its total paid-up capital to a single institution, while the capital market exposure rule necessitates that a bank does not invest more than 25 per cent of its capital in the stock market.
ICB capital management Limited is the trustee and Alfa Capital Management and Roots Investment is the mandated lead arranger of the ICB’s bond.
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