The Bangladesh Securities and Exchange Commission has started scrutinising the assets of the mutual funds as the commission is suspecting unlawful use of the assets by some asset management companies. In December last year, the capital market regulator issued letters to the custodians of mutual funds asking the entities to submit details of the MFs’ assets under their custody within January 20, 2015, a BSEC senior official told New Age.
The custodians were asked to submit data of the mutual funds as of December 30 last year, he said.
Custodian is a financial institution that holds customers’ securities for safekeeping so as to minimise the risk of their theft or loss.
Custodians are assigned in a mutual fund for ensuring security of the assets managed by the asset management companies.
There are complaints that the AMCs are misusing the assets of mutual funds in different forms, the official said.
Based on the complaints, the commission asked the custodians of the mutual funds along with the AMCs to submit details of the assets, he said.
‘The commission is now crosschecking the asset-related data of the mutual funds provided by the AMCs and the custodians, he said.
The commission in the last couple of years had taken several steps to make the ailing mutual fund sector vibrant by ensuring proper function of the mutual fund-related organisations, another BSEC official said.
In line with the commission’s previous actions, verifying assets of the mutual funds will help the commission to find out irregularities done by the mutual fund-related entities, he said.
After the market crash in 2010-2011most of the mutual funds failed to offer dividend to their unit holders that put a negative impact on the overall mutual fund sector.
Due to the investors’ negative perception about the mutual funds, most of funds are now trading at the stock exchanges below their net asset values per unit, he said.
The commission’s actions against the asset managers, trustee and custodians of the mutual funds might improve performances of the funds and restore investors’ confidence, he said.
As per the BSEC’s data, presently nine entities are functioning as custodian of the mutual funds.
The entities are Standard Chartered Bank, Hongkong and Shanghai Banking Corporation, Dhaka Bank, Southeast Bank, AB Bank, BRAC Bank, Citi Bank NA Bangladesh, Agrani Bank and Commercial Bank of Ceylon.
Seventeen asset managers are operating 41 mutual funds listed with the capital market.
-With New Age input
