Banks will be able to disburse no more than Tk 3 crore in share credit to any stock dealer as the central bank set the limit in line with a revised law.

The loans will only be allowed for A- and B-category shares, Bangladesh Bank said in a notice yesterday.
The credit amount may cover up to 70 percent of the last six months’

weighted average prices of A-category shares and 60 percent of B-category shares, but that must not cross Tk 3 crore in any case.
The previous limit was Tk 1 crore.

The Banking Companies (Amendment) Act 2013, gazetted on July 22, empowers the central bank to set the credit limit time to time.

However, the banks’ total exposure to the capital market would not cross 25 percent of their total regulatory capital.

The central bank in yesterday’s directive also said the banks which have over-exposure to capital market will have to reduce the exposure by July 21, 2016.

The banks will also have to regularly submit a central bank prescribed report on their investment exposure to the stockmarket within first 10 days of a month, the BB said.