BB seeks stabilisation fund transfer info from banks

Bangladesh Bank has asked stock market listed banks to submit information on how much money they have transferred to the capital market stabilisation fund (CMSF) established by the Bangladesh Securities and Exchange Commission (BSEC).

The central bank sent a letter to managing directors and CEOs of listed banks on Thursday (January 13), some high officials of those banks told The Business Post.

BB asked banks to submit information about their involvement in CMSF within January 18, a senior central bank official said. He said several banks had already transferred their undistributed and unclaimed dividends to the CMSF despite BB’s dissent about the fund.

“They must bring back the money since they cannot transfer undistributed and unclaimed dividends to the CMSF according to the Bank Company Act-1991,” the official said.

On June 27 last year, BSEC instructed all listed companies to give unclaimed cash and stock dividends to CMSF.

A BSEC gazette notification said that CMSF must be a perpetual fund for functioning as a custodian of unclaimed or unsettled dividend (cash or stock) or un-allotted rights shares or non-refunded public subscription money in favour of the shareholders or stockholders or investors.

BB, however, found the instruction contradictory with the Bank Company Act and Negotiable Instruments Act. It asked banks not to follow BSEC’s instructions.

The disagreement between the two regulatory bodies is yet to be resolved even though they had agreed to amend contradictory provisions in November.

BSEC sources said the CMSF fund size has grown to Tk 400 crore and is expected to reach Tk 7,000 crore. The initial target was to set up a Tk 21,000 crore CMSF.

Of the fund, Tk 100 crore has already been handed over to the Investment Corporation of Bangladesh to support market stability.

Apart from the disagreement regarding the CMSF, the central bank also differed with another BSEC instruction that allowed listed companies to issue dividends for a particular year despite having accumulated losses based on that particular year’s profit.