BB specifies stock market investment tools for NBFIs

With the objective of removing ambiguity, the Bangladesh Bank yesterday specified the instruments where non-bank financial institutions' investment would be considered while calculating their stock market exposure.

The central bank said the Financial Institutions Act 1993 fixed the highest ceiling of investment by the NBFIs in shares of other companies. But it was not specified which instruments would be considered as stock market investment, said the Bangladesh Bank.

Citing the issue, the central bank said all listed shares, debenture, corporate bonds, mutual funds and other products at market prices shall be considered as share market investment for the NBFIs.

At the same time, the outstanding balance of loans given by the NBFIs to their subsidiaries and associated companies directly or indirectly engaged in the capital market will be considered as the stock market investment.

The amount of loans the NBFIs have lent to other companies that are dealing with the stock market will also be included in the exposure, according to the BB. The fnance that was given to any stock investment-related fund will be considered as the stock market investment.

However, the equity investment of its subsidiary companies, long-term equity investment or venture capital and the shares of the Central Depository Bangladesh Ltd and stock exchanges would not be counted as the capital market investment, the central bank said.