Capital requirement relaxed for venture capital investments of banks

Bangladesh Bank (BB) has relaxed its capital requirement for banks against venture capital.

From now on, banks can maintain 100 percent risk-weighted capital, down from the existing 150 percent against their investment in alternative investment tools, as per BB circular issued on Tuesday.

As per the circular, banks will need to maintain less capital against such investments.

The notice will come into effect immediately and continue until September 30, 2022.

A venture capital fund is an alternative investment fund that is invested primarily in non-listed equity and equity-linked securities of startups with less than two years’ operational history, or green field companies or emerging early-stage undertakings mainly involved in new products.