2 other banks fined for violating equity investment rules

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The Bangladesh Bank yesterday fined two more banks and warned four more for investing in the stock market breaking the rules.

Exim Bank and Premier Bank were fined Tk 50,000 each for violating the regulations of the central bank’s special program for stock exchange banks.

Previously, the BB fined NRB Bank and NRB Commercial Bank for breaking securities rules.

The central bank had previously warned Exim Bank and Premier Bank not to break the rules, a BB official said.

In a statement, Premier Bank said it had complied with all regulations relating to stock investments set by the central bank.

The lender has bought some shares of companies that have not paid a 10 percent dividend in three consecutive years. He made the correction immediately after discovering it, the statement said.

Senior Exim Bank officials declined to comment.

The BB warned four lenders – Eastern, Union, Global Islami and Agrani – because they also broke the rules of the special fund created by the central bank.

BB officials said the central bank would take punitive action against them if they broke the rules again.

Contacted, the officials of the four banks declined to comment.

The central bank announced the special package for banks in February last year to make the stock market vibrant.

Each bank is authorized to create a fund worth Tk 200 crore by obtaining financial support from the central bank to invest in the stock market.

Lenders are allowed to receive the fund through repurchase agreements for treasury bills and bonds. They have to pay 5% interest on the fund and repay it by February 2025.

Banks are allowed to present the fund as a special investment, which will exceed a bank’s exposure to the stock market.

The Banking Companies Act of 1991 limits a bank’s exposure to the stock market to 25 percent of its capital, which includes paid-up capital, share premium, legal reserve and retained earnings.


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