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2015-05-11

Added 2026-08-11 · Updated 2026-08-14

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.

Bangladesh

Bangladesh Bank

Department of Financial Institutions andMarkets Bangladesh Bank Head Office Dhaka-1000 DFIM Circular No. -05 Date: 11 May, 2015 28 Baishakh,1422 Chief Executives/ Managing Directors All Financial Institutions in Bangladesh

Dear Sir, Provision against unrealized loss for diminution of value of investment in Mutual Fund Units Financial Institutions (FIs) have to comply with the following instructions regarding the maintenance of provision against unrealized losses arising from investment in mutual fund units: A. For Closed-end Mutual Funds:

FIs need not maintain any provision when the average cost price (CP) of a mutual fund is lower than or equal to the market value (MV) i.e., CP ≤ MV; or lower than or equal to 85% of the net asset value at current market price ((NAVcmp) i.e., CP ≤ NAVcmp * 85%);
If the average cost price (CP) of a mutual fund unit is greater than market value (MV) i.e., (CP > MV ); or greater than 85% of net asset value (NAVcmp) at current market price i.e., (CP > NAVcmp * 85%), FIs will have to maintain provision as followinga. when MV ≥ NAVcmp * 85%, thenRequired Provision (RP) = CP - MV b. when MV <NAVcmp * 85%, thenRequired Provision (RP)= CP – NAVcmp * 85% Page no-1/2 Website: www.bb.org.bd

B. For Open-end Mutual Funds:

FIs need not maintain any provision when the average cost price (CP) of a mutual fund is lower than or equal to 85% of net asset value ((NAVcmp) at current market price i.e., (CP ≤ NAVcmp * 85%).
FIs will maintain provision when the average cost price (CP) of a mutual fund is greater than 85% of net asset value ((NAVcmp) at current market price i.e., (CP>NAVcmp * 85%) as followingRequired Provision (RP) = CP – NAVcmp * 85% FIs will have to apply the latest NAVcmp calculated and disclosed as per article no. 60 of Securities and Exchange Commission (Mutual Fund) Rules, 2001. This circular shall come into effect immediately. Sincerely yours, (Md. Shah Alam) General Manager Phone: 9530178 Page no-2/2