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Daily Business News All Daily Business News
06 Mar 2013
BB may consider raising bank loans to stock dealers

The central bank yesterday assured a coordination committee on the capital market of reviewing its recommendations that include enhancing bank loans to stock dealers and brokers.

The Bangladesh Bank may also consider the other demands such as allowing subsidiary brokerage firms or merchant banks to convert part of the loans of their parent companies into equities, for the sake of the market.
SK Sur Chowdhury, deputy governor of the central bank, told this to reporters after a meeting with the committee at the BB headquarters in Dhaka. Governor Atiur Rahman chaired the meeting.

“Money market and capital market have an equal role to play in developing the economy. No country can grow by keeping its capital market weak,” Chowdhury said. The BB would take necessary steps to boost the capital market, he said quoting the governor.

The committee headed by the Federation of Bangladesh Chambers of Commerce and Industry’s President Kazi Akram Uddin Ahmed also urged the BB to encourage banks to come up with investments in the stockmarket.
Ahmed said the meeting discussed different issues to make the market vibrant. “The market will get stable gradually,” the FBCCI president said.

The ongoing shutdown programmes took a heavy toll on the stockmarket, as prices plunged 5.21 percent on Sunday, the highest single-day fall in the last 13 months. The market was, however, up by 3.41 percent yesterday.
Earlier on January 29, the DSE formed the eight-member coordination committee to solve the problems identified by the bourse. Yesterday’s meeting was part of a series of consultation with various stakeholders.
The panel called upon the central bank to allow banks to increase their exposure to the stockmarket, which is now suffering from a liquidity dearth.
“Most of the banks, which are considered as major institutional investors, remain either on the sidelines or inactive from making fresh investment in the secondary market,” said Ahmed.

He said the committee also requested the central bank to raise the credit limit of stock dealers/brokers up to Tk 20 crore from existing Tk 1 crore.
The panel asked for considering the loans of the stock brokers, merchant banks and financial institutions as exposure to the stockmarket if the loans are backed by securities.

It also demanded reducing the amount of check processing fee and cuts in interest rate and electronic fund transfer charges. The panel requested the central bank to take steps so that the stockbrokers and merchant bankers can get loans at a concessional rate.

Mohammed Nurul Amin, chairman of Association of Bankers Bangladesh, Rakibur Rahman, president of the DSE, and Mohammed A Hafiz, president of Bangladesh Merchant Bankers’ Association, were also present at the meeting.

Source :: The Daily Star