DFIM Circular No. 01: Call Borrowing Limit Set Based on Equity Instead of Net Asset for Financial Institutions

DFIM Circular No. 01
Department of Financial Institutions and Markets Bangladesh Bank Head Office, Dhaka.
DFIM Circular No. 01 Date: 16 Magh 1423
29 January 2017

To
Chief Executive/Managing Director
All Financial Institutions operating in Bangladesh

Dear Sir,

Reference is drawn to our AFID Circular No. 05 dated 05 March 2005, regarding the determination of the limit for borrowing from the call market based on net assets.

Regarding the consideration of the financial institution's equity as the basis for change.

The aforementioned circular instructed financial institutions to borrow up to a maximum of 15% of their net assets from the call market. It has now been decided to consider the financial institution's equity as the basis for determining the upper limit of borrowing from the call market instead of net assets. In this context, the following instructions are issued:

1. Financial institutions will prepare statements of position based on the date of December 31 and determine the institution's equity based on this. From the date of 01 February 2017 (based on information as of 31 December 2016), financial institutions may borrow from the call market at a maximum rate of 30% of their determined equity.

2. Financial institutions will submit equity-related data as of 31 December each year to the Bangladesh Bank website using the template "তুঞথচঝথঝথখওঅইথঋওথখওঅই্থ" by the 25th of the following month (January). However, equity-related data as of 31 December 2016 may be submitted by 31/01/2017. In this regard, the following codes (চৎঁফবহঃরধষ ঝঁঢ়বৎারংরড়হ ঈযধৎঃ ড়ভ অপপড়ঁহঃং ড়ৎ চঝ ঈঙঅ) must be used:

ঝখ ঈড়সঢ়ড়হবহঃং চঝ ঈঙঅ ঝখ ঈড়সঢ়ড়হবহঃং চঝ ঈঙঅ 01 চধরফ ঁঢ় ঈধঢ়রঃধষ 3010002 05 ঝযধৎব চৎবসরঁস 3010006 02 জবঃধরহবফ ঊধৎহরহমং 3010003 06 অংংবঃ জব-াধষঁধঃরড়হ জবংবৎাব 3010007 03 ঝঃধঃঁঃড়ৎু জবংবৎাব 3010004 07 ঙঃযবৎ ঈধঢ়রঃধষ (ওভ ধহু) 3010009 04 এবহবৎধষ জবংবৎাব 3010005 08 ঙঃযবৎ জবংবৎাব 3010026

3. Borrowing from the call market may be made based on the equity as of 31 December for the next 12 months, i.e., from 1 February to 31 January.

4. All previous instructions issued on this matter prior to the issuance of this circular shall be deemed replaced by this circular.

This instruction is issued under the powers conferred by Section 18(c) of the Financial Institutions Act, 1993.

Yours faithfully,

Signed/-
(Md. Azizul Haque)
Deputy General Manager
Phone No. 9530145