Though the investment volume of banks in the capital market has increased, many are still far away from their investment limit. Despite the policy relaxation and enforcement of Bangladesh Bank (BB), 36 out of 61 scheduled banks of the country have invested in the stock market. Md Serajul Islam, executive director and BB spokesperson told UNB that the central bank set a target for banks to invest in the capital markets. Also read: BB to release new notes of Tk23000 crore ahead of Eid Though the BB set a limit on investment in the share market, the banks are ignoring it as the compliance is not obligatory by law, he said. The latest data found that 36 banks have constituted a special fund of Tk5720 crore so far to invest in the capital markets, far below permitted limit of TK 7200 crore. Of the fund, Tk1400 crore has been invested in ‘sukuk bond’, a bond that conforms to Islamic strictures on the prohibition of charging or paying interest. The central bank relaxed policy for scheduled banks to invest in the share markets on August 31, 2021, after the finance ministry’s instructions in this regard. The banks have now a ready fund of Tk2230 crore for investing in share markets at any time. Banks have certain limits on investing in the capital market. A bank can invest up to 25 per cent of its regulatory capital in the capital market. But to increase the liquidity flow in the capital market, Bangladesh Bank offers an additional investment of up to Tk 200 crore for banks out of this fund. But the banks did not go up to the approved size to invest in the capital market. Banks can still add more Tk1, 480 crore to the special fund if they wish, the BB sources said. Around Tk 3711 crore ( Tk 2231 crore of existing fund plus Tk1480 remaining addable fund) banks can invest in the capital market. Prof Shibli Rubayat-Ul-Islam, Chairman, Bangladesh Securities and Exchange Commission (BSEC) told the correspondent that the capital market would be strengthened if the banks’ investment limit is fully injected in the market. He also urged the banks to help build a stable and investment friendly capital market. Also read:BB to fix interest rates for NBFIs too However, the Chief Executive Officer a 4th generation bank told UNB that banks have to secure the interest of depositors first before investing money anywhere. Wishing not to be named he said there are any shares, but for lack of good shares they cannot invest money in the capital market. He suggested increasing the number of good and credible companies in the market to attract investment from the banks.

The ministry of finance called strengthening capital markets literacy activities to raise awareness among investors to build sustainable stock markets for future generation. The ministry has given some specific directives to Bangladesh Securities and Exchange Commission (BSEC) as part of government's initiative to reform the sustainable capital market. Read:Stock markets continue to fall on the third day Tuesday The Financial Institutions Division (FID), a wing of the finance ministry, has sent a letter with the directive to the BSEC chairman recently. The letter asked BSEC to enhance surveillance so that no company or institution can enter or exit the capital market illegally. At the same time, the letter mentioned that a team of finance ministry will keep a close watch on the markets, so that no dishonest syndicate can influence the capital market through manipulation. Read:Capital market to follow banking sector's ‘lead’ in operating during lockdown The letter also directed BSEC to keep close observation on the companies, stakeholders or institutions’ share transactions in the capital market, and bring suspicious transactions under special scrutiny. The letter has also called for instant legal action if any company is found involved in anything illegal and strengthens coordination with all organizations involved in the capital market.