Banks Stock Market Subsidiaries
BB extends deadline by 1 more year to adjust loan limit
Bangladesh Bank on Monday extended time by one more year for adjusting single borrower exposure limit by the commercial banks’ subsidiary brokerage houses and merchant banks. The BB issued a circular to managing directors and chief executive officers of all banks asking them to adjust the loans which have exceeded the single borrower exposure limit in their respective subsidiaries by December 31, 2014 instead of December 31, 2013.
The BB circular said that the banks in the period would not be allowed to increase the limit of the loans which were given crossing the single borrower exposure limit.
A BB official told New Age on Monday that the central bank had taken the decision as the MDs and CEOs of the banks had recently requested the BB to extend the time considering the country’s overall macroeconomic situation amid the ongoing political unrest.
Under the existing provisions for single borrower exposure limit, the merchant banks and brokerage houses of the scheduled banks are not allowed to disburse more than 15 per cent of their capital in loans at any point of time to any single person or enterprise or organisation of a group.
A number of banks, however, violated the rules in 2010 when the capital market witnessed a boom.
On Monday, the BB extended the deadline for the fourth time.
The first deadline was on August 31, 2010.
Amid a massive plunge in the stock prices in September 2012, the central bank had extended the deadline to December 31, 2012.
Later the BB had set a new deadline to adjust the limit at December 31, 2013.
‘But, some banks are yet to adjust the limit. So, the central bank has set a fresh deadline,’ the BB official said on Monday.
He said that the central bank would expect that the move would help to stabilise the stock market.
-With New Age input
