BSEC ORDER ON STABILISATION FUND: Banks, non-banks can’t comply: BB

Bangladesh Bank

Photo: Collected

Listed banks and non-bank financial institutions cannot comply with the stock market regulator’s orders on the capital market stabilisation fund and cash dividend payment as they are inconsistent with the Bank Company Act.

The Bangladesh Bank informed the Bangladesh Securities and Exchange Commission (BSEC) about this in a meeting between the two sides at its headquarters yesterday.

A top official of the central bank said the BB apprised the BSEC about the complexity of the capital market stabilisation fund as it contradicts with the Bank Company Act.

The BSEC passed a rule on the stabilisation fund in June that would be formed using the undistributed and unclaimed dividends of the listed companies. The aim is to use the funds to safeguard the interest of the stock market and general investors.

The fund size would be around Tk 21,000 crore, according to the commission.

But banks and NBFIs would not be able to follow the orders, the central banker said.

The central bank also said banks would also not be able to follow the commission order on the cash dividend announced by the listed banks and NBFIs.

The commission recently allowed the listed companies to declare cash dividends from the profits made in the just-concluded financial year despite having accumulated losses.

This is not consistent with the Bank Company Act, the Financial Institutions Act, and international norms, the central banker said.

So, the BB has informed the BSEC that it couldn’t be applicable for banks and NBFIs.

The order for other listed companies should also be scrapped for the sake of general shareholders, the central banker said.

The BB urged all the regulators governing financial institutions, including the BSEC, to consult with the central bank before taking any step about banks and NBFIs.

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