As many as 27 scheduled banks have so far invested Tk 14 billion in the stock market under the special fund, formed under the central bank's initiative to support the ailing market, officials said.
The Bangladesh Bank (BB) officials said those banks invested 39 per cent of the aggregate amount of individual funds.
"Some 27 of 41 scheduled banks have so far formed the special fund as per our circular, issued earlier to support the country's stock market," one of the BB officials said.
He also said the aggregate amount of the banks' funds stood at Tk 36 billion, of which Tk 14 billion have been invested in the capital market as on May 19.
In February 2020, the central bank issued a circular on formation of the special fund following the merchant bankers' request to form a Tk 100-billion fund from the government to support the capital market.
The Bangladesh Securities and Exchange Commission (BSEC) played a vital role in facilitating formation of the special fund through the central bank following the ailing situation of the market.
Meanwhile, BSEC Chairman Prof. Shibli Rubayat Ul Islam has expressed dissatisfaction over the banks' poor response in creating the special fund for the capital market.
"The banks are not coming forward although the central bank is pursuing them for creating the special fund. It's really unfortunate for the economy and the capital market as well."
He, however, said some banks showed good response in forming the special fund.
"We hope other banks will also come forward to support the capital market," the BSEC chairman added.
As per the circular, a bank can create a five-year special fund with its own resources or with financing received from the BB through repo or re-financing schemes.
"Most of the banks, which have so far formed the special fund, invested funds ranging from Tk 600 million to Tk 700 million to the stock market," the BB official said.
He noted that five of the banks have invested funds ranging from Tk 920 million to Tk 1.0 billion. The banks are Sonali, United Commercial, NCC, IFIC and Rupali.
Asked, whether the banks' response is sufficient in terms of forming the fund and investing in the market, the BB official said they cannot put pressure on the banks.
"We've issued the circular incorporating some facilities for the banks. The banks have the scopes of availing facilities through investments made in the capital market."
He further said the banks' investments in the stock market depend on their decisions regarding individual portfolio management.
"So, we cannot put pressure on the banks. Nevertheless, we are taking information in this regard on regular basis," the BB official added.
The BB circular said the special fund would be allowed to be invested in equity shares, mutual funds, bonds or debentures, and special purposes maintaining the prescribed criteria.
The banks would not need to make any provision for a decrease in market value of their investments, the circular added.
After issuance of the BB's circular, many banks did not show interest to create the special fund due to various reasons, including fate of their investments amid volatility in the capital market.
The BB officials said formation of the special fund was also hampered by the Covid-19 pandemic outbreak.
The securities regulator earlier sought information from the banks regarding formation of the special fund for the capital market.
The BSEC was not happy following the banks' poor response in creating the special fund.
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