Private commercial banks (PCBs) announced Sunday the launching of a Tk 50 billion stock market stabilisation fund (SMSF) to help revamp the country's stock market.
They will initially invest Tk 10 billion in the proposed fund, the size of which will be enhanced gradually.
The announcements came after an emergency meeting of the Bangladesh Association of Banks (BAB), a platform of owners of PCBs, held at its city office on the day with its Chairman Nazrul Islam Mazumdar in the chair.
At the meeting, the BAB decided that each of its member-banks would contribute Tk 200 million to the proposed SMSF while an amount of Tk 100 million would come from non-banking financial institutions (NBFIs), insurance companies and interested publicly listed companies.
Sixteen out of 29 BAB members attended the meeting while Chairman of the Bangladesh Insurance Association Sheikh Kabir Hossain was also present as an invited guest.
"We've decided to establish the fund aiming to bring back stability in the country's stock market," the BAB chairman told reporters after the meeting, adding that the fund will go into
operation shortly after receiving its approval from the central bank and the capital market regulator.
"We think that the PCBs will not face any hurdle to invest Tk 200 million to the fund," Mr Mazumdar said while replying to a query.
Some banks have already started making fresh investment in the stock market, he said, adding that the banks may invest Tk 400 billion-Tk 450 billion in the market.
The BAB chairman also said the fund will be operated like a mutual fund and its size will cross Tk 50 billion.
"An asset management company (AMC) will operate the fund in line with the existing rules and regulations," President of the Bangladesh Association of Publicly Listed Companies (BAPLC) Salman F Rahman said, while replying to a question.
The BAB has asked its member-banks to confirm their firm commitment to making their investment in the proposed fund by October 31 this year.
Another meeting of the BAB will be held after receiving such commitments from its member-banks, a private banker close to the BAB told the FE.
The meeting discussed in details the possibilities for participation of other financial institutions, insurance companies and publicly listed companies as sponsors of SMSF, in addition to that of banks. This was indicated in a working paper on the fund that dealt with issues on which decisions were required.
After discussions, the decision was taken in favour of such participation by financial institutions other than banks.
Three-page working paper, which was placed before the BAB's meeting on Sunday, also indicated the SMSF would be managed by a new AMC whose paid up capital would be Tk 100 million to be subscribed by the sponsors of the SMSF on a pro rata basis of 1.0 per cent of the contribution to the fund.
"This amount will be in addition to the sponsors' contribution to the fund," it said, adding that the board of directors of the AMC will comprise reputed and competent persons of the society, not in any way related to the sponsors of the SMSF.
The board of directors of the AMC will appoint a professional chief executive officer (CEO) who will be responsible for the day-to-day management of the AMC, according to the paper.
No comments:
Post a Comment