Investing in stocks gets easier for expats, foreigners

Bangladesh Bank (BB) has relaxed its policy for foreigners and expatriate Bangladeshis to invest capital in the local stock markets. From now on, foreigners and expatriates will be able to invest using NITA (Non-Resident Investors Taka Account) in the stock market.

With their money deposited in NITA account, foreign investors and expats will be able to trade shares or invest in non-end mutual funds. This initiative has been taken to increase the liquidity flow in the stock markets.

BB on Thursday (August 20) issued a circular in this regard and sent it to the chief executives of commercial banks. It directed the banks to inform their foreign and expat Bangladeshi clients about the relaxation of the policy.

Stock markets in the country have been in a slump for a long time until recently.

This new policy easement is a part of various initiatives taken by the government to increase foreign and expatriate investment to increase liquidity in the market.

NITA account is for transferring foreign currency and converting it to taka. On behalf of foreigners and expatriates, their representatives or relatives can also open or manage the accounts. After the end of a transaction, some money is deposited in the NITA account. However, this money is useless for a bank. The policy change will allow them to use that money to invest in the stock market on easy terms.

Moreover, there are two types of mutual funds in the stock market. Term and non-term or open end. In that sense, indefinite mutual funds can be bought with that money. However, they cannot invest in any stock that is not listed with the stock exchange.

The circular said such funds should be managed after the approval of the Bangladesh Securities and Exchange Commission (BSEC). Investments can also be made in non-mature mutual fund proposals that have been duly approved by the BSEC.

Investors must inform Bangladesh Bank within 14 working days of investing this money. In this case, if the profit is earned, the dividend can be paid to the investors by collecting the tax money.

The circular further said, in the interest of maintaining transparency in the management of these funds, regular reports should be prepared and reported to Bangladesh Bank.

Sources said that previously the money deposited by foreigners and expatriates as NITA could not be invested in the stock market in this process. As such, large sums of money are often deposited. If these funds are invested in the stock market, on the one hand, foreign investment will increase. On the other hand, investors will have the opportunity to make additional profits.

ask/zn