The Bangladesh Bank (BB) has extended the tenure of banks’ capital market special funds by approximately 22 months, until 31 December 2026, considering the current capital market situation and aiming to ensure overall stability of the financial sector.
Additionally, it instructed the banks that formed the special funds and invested in the stock market to gradually reduce their investments within the extended period, according to a circular issued by the Department of Off-site Supervision of the central bank today (8 April).
The special fund, aimed at enhancing liquidity in the capital market, was introduced in 2020 during the pandemic, allowing each bank to create a Tk200 crore fund with a five-year tenure. The tenure of the fund expired in February this year.
The circular said within the extended tenure, a specific action plan approved by the board of directors of the respective investor bank must be submitted to Bangladesh Bank within 30 days of the issuance of the circular, to gradually reduce the investment balance in the special fund.
The implementation of the action plan must be ensured in a timely and proper manner.
Upon the expiration of the tenure on 31 December, any remaining investments in the fund will be considered as part of the capital market investment fund, both on a solo and consolidated basis, in accordance with Section 26K of the Bank Companies Act, 1991, the circular reads.