Regulatory Alerts2016-03-30
Added · Updated
DFIM Circular No. 04: Investment in Non-listed Special Purpose Funds Registered with BSEC
Financial Institutions in Bangladesh are prohibited from investing in non-listed special purpose funds registered with the Bangladesh Securities and Exchange Commission unless they adhere to specific guidelines. Aggregate investment in such funds cannot exceed 50 percent of an institution's paid-up capital, while investment in any single fund is capped at the lower of 10 percent of paid-up capital or 20 percent of that fund. Board of Directors approval and prior authorization from Bangladesh Bank are required before committing to any investment, accompanied by submission of detailed capital, liquidity, and asset-liability data. The trustee must declare that the fund will not purchase instruments from the investing institution or its related parties and holds no financial claims over banks or financial institutions, with such investments excluded from the limits under section 16 of the Financial Institutions Act, 1993.
Department of Financial Institutions and Markets Bangladesh Bank Head Office Dhaka-1000 DFIM Circular No.04 09 Date: Chief Executives/Managing Directors All Financial Institutions in Bangladesh Dear Sir, Regarding Investment in Non-listed Special Purpose Funds registered with Bangladesh Securities and Exchange Commission It has been decided that from now on Financial Institutions (FIs) willing to invest in non-listed special purpose funds (e.g. Alternative Investment Fund, Special Purpose Vehicle, or any other similar fund) which are registered with Bangladesh Securities and Exchange Commission (BSEC) shall follow the guidelines stated below:
- The aggregate investment in such funds made by any FI shall not exceed 50 percent of its paid up capital.
- The investment in such a single fund made by any FI shall not exceed 10 percent of its paid up capital or 20 percent of that particular fund, whichever is lower.
- The investment decision in such funds must be approved by Board of Directors of FIs and before making commitment to invest FIs shall obtain approval from Bangladesh Bank (BB). In this connection, FIs shall submit their latest information on capital, liquidity, quality and quantity of assets and liabilities along with all the information related to above mentioned funds (including the declaration of clause 4) to BB.
- The trustee of the fund shall declare thata. No investment shall be made to purchase the share/debenture/bond or any other instruments of investor FI and its related party by such funds; b. The fund has no financial claim over any bank and FI and no investment shall be made that may create such claim over any bank or FI in future;
- Investment in such funds shall be excluded from the limit mentioned in section 16 of the Financial Institutions Act, 1993. This shall come into force with immediate effect. Sincerely yours, (Md. Shah Alam) General Manager Phone: 9530178 30 March 2016 16 Chaitro 1422 Website: www.bb.org.bd
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