The central bank has set the investment ceiling for banks under Bangladesh Securities and Exchange Commission-approved special purpose vehicle (SPV) or alternative investment fund for infrastructure projects.
To this effect, the department of off-site supervision of the Bangladesh Bank issued a circular on Thursday.
Banks can invest at the highest Tk 7.0 billion or single borrower exposure limit, whichever is lower, in the public-sector infrastructure projects.
Such schemes include like power and energy, road and bridge projects, tourism infrastructure, digital infrastructure, according to the circular.
The investment for a single bank will be limited to 25 per cent of the paid-up capital of the fund in special cases, it mentioned.
With regard to public-private partnership projects, a bank is allowed to invest at the highest Tk 6.0 billion or single borrower exposure limit, whichever is lower.
According to the circular, the investment for a single bank will be limited to 22 per cent of the paid-up capital of the fund in special cases.
Banks can invest in the same types of private-sector infrastructure projects at the highest Tk 6.0 billion or single borrower exposure limit, whichever is lower.
Again, the investment for a single bank will be limited to 20 per cent of the paid-up capital in special cases for private-sector projects.
However, the central bank issued a set of guidelines to avert investment risks in such funds.
The trustee concerned of the fund has to have a SPV-trustee licence of the commission.
The experience and good track record of managing SPV is an indicator of investment of such fund.
Banks cannot invest a project-specific SPV if its external credit rating is less than those of the long-term credit rating-2 and short-term 2.
They cannot purchase more than 10 per cent share of the paid-up capital of the company in a non-listed firm while investing equity instrument, reads the circular.
