DOS Circular Letter No. 04: Constitution of Special Fund for Capital Market and Investment Policy

Bangladesh Bank Chief Executive Office Motijheel, Dhaka-1000 Bangladesh Ref No: DOB.DOS.RMMCMS.1154/161/2025-2101

25 Chaitra 1431 DOS Circular Letter No.-04 Date: --------------------- 08 April 2025

To, Managing Director/Chief Executive Officer All Scheduled Banks operating in Bangladesh.

Dear Sir,

Regarding the Constitution of Special Fund for Capital Market and Investment Policy.

Through DOS Circular No.-01 issued by Bangladesh Bank on February 10, 2020, on the subject cited above, guidelines were provided to scheduled banks regarding the constitution of a Special Fund of 200.00 (Two Hundred) Crore Taka for investment in the capital market and investment from said fund. Through the aforementioned circular, the maturity period of this fund was fixed until February 2025. However, according to DOS Circular Letter No.-39 dated September 27, 2021, the maturity period for investment in Green Sukuk Bonds issued by Bangladesh Power Development Board (BPDB) under this fund was extended to December 31, 2028 through DOS Circular Letter No.-40. Now, in the context of the prevailing instability in the country's capital market, considering the opinions of various stakeholders and investors in the capital market and banks, and based on Bangladesh Bank's own research to improve the situation and safeguard the interests of the stability of the financial sector, it has been decided to extend the maturity period of the Special Fund to December 31, 2026, under the following conditions:

a) To gradually reduce the investment status of the Special Fund within the fixed maturity period, the concerned investor bank must submit a specific portfolio reduction plan to the Department of Off-site Supervision (Division-2) within 30 (thirty) days of the issuance of this circular;

b) The said portfolio reduction plan must be implemented timely and properly; and

c) The remaining investment (if any) of this fund maturing on December 31, 2026, will be considered as part of the Capital Market Investment Fund on both the Bank Company and Subsidiary Company bases in accordance with Section 26C of the Bank Companies Act, 1991, and must be reported in the Capital Market Investment Related Information (CMIRI) report.

2. In order to align with the fixed maturity period, the following decisions have been taken regarding certain instructions of DOS Circular No.-01/2020:

a) In the case of raising funds through the repo facility from Bangladesh Bank, the time limit mentioned in clause 1(g) of the said circular will be September 30, 2026, instead of January 13, 2025;

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b) In the case of renewal of the repo facility taken from Bangladesh Bank, the time limit mentioned in clause 1(e) of the said circular will be September 30, 2026, instead of February 09, 2025;

c) In the case of market-based revaluation of the bank's own portfolio formed under the Special Fund, the time limit mentioned in clause 1(c)(2)(r) of the said circular will be December 31, 2026, instead of February 2025;

d) The maximum period for current and revolving loan limits provided to form the bank's own portfolio under the Special Fund of the subsidiary company mentioned in clause 1(c)(2)(rr) of the said circular will be November 30, 2026, instead of February 09, 2025, and the time limit for market-based revaluation of the said portfolio will be December 31, 2026, instead of February 2025;

e) The maximum period for current and revolving loan limits provided to form the own portfolio of other institutions related to the capital market under the Special Fund mentioned in clause 1(c)(2)(rrr) of the said circular will be November 30, 2026, instead of February 09, 2025, and the time limit for market-based revaluation of the said portfolio will be December 31, 2026, instead of February 2025.

3. These instructions will be considered operative from the time of maturity of the Special Fund according to DOS Circular No.-01/2020. Additionally, other instructions of DOS Circular No.-01/2020, DOS Circular Letter No.-27/2020, DOS Circular Letter No.-35/2021, DOS Circular Letter No.-39/2021, and DOS Circular Letter No.-40/2021 will remain unchanged.

4. A copy of the notification issued in this regard is enclosed herewith for the information of all concerned.

Yours faithfully,

(A.N.M. Moinul Kabir) Director (DOS) Phone: 9530314

Bangladesh Bank Notification 25 Chaitra 1431 Ref No: DOS(RMMCMS)1154/161/2025-2101 Date: ---------------------- 08 April 2025

In continuation of the Notification No. DOS(RMMCMS)1154/161/2020-545 issued on February 10, 2020, under Section 121 of the Bank Companies Act, 1991 (Act No. 14 of 1991), it has been decided to exempt scheduled banks from the instructions of preparing financial statements under clause 4(x) serial number of the first schedule of Section 38 of the same Act, regarding investment in the capital market by scheduled banks in the manner directed by Bangladesh Bank under the Special Fund until December 31, 2026, in accordance with Section 26C of the Bank Companies Act, 1991 (as amended up to 2023).

(Md. Zakir Hossain Chowdhury) Deputy Governor