The central bank yesterday issued a circular to clarify that non-bank financial institutions' investment in their subsidiary would not be considered while measuring their exposure to the capital market.

In line with the circular, long-term capital investment of non-bank financial institutions in other companies will not be considered as its exposure limits to the stockmarket.

On November 23, the Securities and Exchange Commission declared short-, mid- and long-term steps to stabilise the market.

The SEC said: “The loans provided by banks and financial institutions to their capital market subsidiaries and long term equity investment will not be taken into account while estimating their 'exposure to stock market'.”
The Bangladesh Bank has extended the deadline for financial institutions to adjust their single-party exposure relating to the stockmarket by one year to December 31 of 2013, according to the circular.

Single party exposure limit is 15 percent. It means if a financial institutions' paid-up capital is Tk 200 crore, it cannot lend more than Tk 30 crore to its subsidiary.

Besides, in case of provisioning stockmarket investment by financial institutions, gains and losses would be considered instead of net loss only.

The copies of the central bank circular have been sent to chiefs of all financial institutions.

The Daily Star/Bangladesh/ 1st Feb 2012