Provision Against Stock Losses
BSEC allows m-banks, brokerages to keep it in 5 instalments
The Bangladesh Securities and Exchange Commission on Monday issued a directive, allowing merchant banks and stockbrokers to keep provision against the losses the firms incurred in 2012 and 2013 in five instalments. The merchant banks and brokerage houses have to keep 20 per cent provision in each instalment. Starting from this month the five instalments will end in the next year.
The BSEC issued the order after a commission meeting held on
December 3.
‘The organisations which will take the facility will not be allowed to declare any cash dividend for their shareholders,’ the BSEC directive said.
The Bangladesh Merchant Bankers Association in last month filed an application with the BSEC, seeking another three years to keep provision against their unrealised losses from the capital market.
‘I think this facility will relax some burden from the merchant banks and brokerage houses as they have been suffering since the market crash for the huge losses they incurred in 2010-11,’ BMBA president Mohammad A Hafiz told New Age on Monday.
The BSEC in January this year, following an appeal from the merchant bankers, had allowed to keep 100 per cent provision against their unrealised losses against their own portfolios and against the margin loans they issued to their clients in 2012 in five instalments.
In December 2012, Bangladesh Bank had allowed some banks to keep 100 per cent provision in five instalments — each of 20 per cent — for unrealised losses against their own portfolio investments in the capital market.
-With New Age input
