Bonds, debentures, sukuk excluded from banks’ capital market exposure

Bonds, debentures and sharia-compliant sukuk will not be a part of the banking companies’ capital market exposure, the Bangladesh Bank in a circular said on Thursday.

With this policy relaxation, the country’s banks will now be able to invest as much as they want in these investment tools.

The new decision came after the recent amendment to the Bank Companies Act 1991.

Earlier, listed bonds, mutual funds, and debentures were included in banks’ capital market exposure. It was discouraging banking companies to invest in bonds as they felt a pressure to keep their total capital market exposure within the 25 per cent limit.

All bonds, debentures, and sharia-compliant securities have been excluded from the banks’ investment portfolio components that in total cannot exceed 25 per cent of a bank’s total equity for the sake of the development of the bond market, as per the amended Bank Companies Act 1991.