Regulatory Alerts2015-05-11
Added · Updated
DFIM Circular No. 05: Provision against unrealized loss for diminution of value of investment in Mutual Fund Units
Financial Institutions in Bangladesh must maintain provisions against unrealized losses on mutual fund investments based on specific cost and valuation thresholds. For closed-end funds, no provision is required if the average cost price is less than or equal to the market value or 85% of the net asset value at current market price; otherwise, the required provision is the difference between the cost price and the applicable lower of market value or 85% of net asset value. For open-end funds, a provision is required only when the average cost price exceeds 85% of the net asset value at current market price, calculated as the difference between the cost price and that 85% threshold. These rules apply immediately using the latest net asset value at current market price disclosed under the Securities and Exchange Commission (Mutual Fund) Rules, 2001.
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