DOS Circular Letter No. 10: Amendment of DOS Circular Letter No. 03/2015 regarding maintenance of provision against investment in Mutual Fund Units by scheduled banks

Bangladesh Bank
Head Office
P.O. Box 325
Dhaka.
Department of Off-Site Supervision
DOS Circular Letter No.- 10 Date: --------------------- To:
The Chief Executive Officers
All Scheduled Banks operating in Bangladesh.

Dear Sir,

Regarding the amendment of DOS Circular Letter No. 03 issued on March 12, 2015, concerning the maintenance of provision against loss due to decrease in value of Mutual Fund Units held by Banks.

DOS Circular Letter No. 03 was issued on March 12, 2015, regarding the maintenance of provision against loss due to decrease in value of both term (fixed-term) and open-ended Mutual Fund Units held by Banks. Considering the prevailing situation and further discussions with various market participants, it has been decided to adopt the following guidelines instead of the existing guidelines mentioned in the aforementioned DOS Circular Letter No. 03/2015, regarding the maintenance of provision against possible loss due to decrease in value of various open-ended Mutual Fund Units held by Banks:

Maintenance of Provision against Investment in Open-ended Mutual Funds

If the average purchase price (AP) of the concerned Mutual Fund Unit is less than or equal to 95% of the Net Asset Value (NAV) determined at the current market price of that Unit at that time (AP ≤ NAV * 0.95), there will be no need to maintain any provision. Otherwise (AP > NAV * 0.95), the provision shall be maintained as follows:

Provision to be maintained (P) = Average Purchase Price of the Unit (AP) - 95% of the Net Asset Value (NAV * 0.95) determined at the current market price.

The above instructions shall come into force immediately. The relevant part of DOS Circular Letter No. 03/2015 shall be considered repealed, and other instructions shall remain unchanged.

Yours faithfully,

(Signature)
(A.S.M. Robiul Hasan)
General Manager
Phone: 9530093
14 Asharh, 1422 Bangabda
28 June, 2015 AD