Bangladesh Bank (BB) on Sunday instructed the commercial banks to invest its idle money in the capital market to tackle liquidity crisis It also asked commercial banks to invest directly in the portfolio of the capital market or lending to a subsidiary company. In these regards, BB has sent a notification to the Chief Executive Officer of the scheduled banks from Bangladesh Bank's Offsite Supervision Division on Sunday.
It said that, “The advance and deposit ratio of most banks are lower than the prescribed levels and there is excess liquidity after SLR reservation.” “For these banks, there are ample opportunities and possibilities to invest in capital-based instruments from the legal limits,” it mentioned.
This investment will play a crucial role to increase liquidity supply in the capital market as well as ensuring a strong capital market for investment friendly environment, BB notification said. The commercial banks can invest in the capital market less than the maximum limit on the bank's circular (25 percent of the capital component considered on a single basis and 50 percent of the capital component considered on a consolidated basis) on the bank's circular.
Banks can get these facilities after meeting their liquidity reserve. However, Stocks have gradually fell for several months and witnessed falling streak for a fourth straight week as investors are yet to gain their confidence on the market amid liquidity crisis despite the government's steps to improve the market condition.
The prime index of the Dhaka Stock Exchange (DSE) has fallen by 77.9 points to close at 4,855 points in last week. The prime index went down by 381 points during the last four week. Meanwhile, the blue chips index (DS30) slummed by 1.13 points during the week to close at 1,735 on Thursday and Shariah index (DSES) dropped 33.58 points to finish at 1,123 in the span of one week. The market capitalisation of the DSE dropped to Tk 3,689 billion on Thursday as against Tk 3,694 billion on first working day of the week.