DOS Circular Letter No. 21: Marking to Market based Revaluation of Treasury Bill and Bond held by the Banking Company

Bangladesh Bank Circular No.: D.O.S. Circular Letter No. 21 D.O.S. Circular Letter No. 21 To The Chief Executive Officer P.O. Box No. 325 Dhaka. Department of Off-Site Supervision D.O.S. Circular Letter No. 21 Date: ----------------

To All Banking Companies operating in Bangladesh.

Dear Sir,

Re: Marking to Market based Revaluation of Treasury Bill and Bond held by the Banking Company.

Reference is drawn to your attention to D.O.S. Circular Letter No. 05 issued on 26/05/2008 on the above subject.

Item No. 3 of the said Circular Letter specifies the ratio of investment in Investment (IG) and Dealing (DG) securities for all Banking Companies operating in Bangladesh. On the other hand, under Section 13(3) of the Banking Companies Act, 1991, foreign banks may hold non-encumbered approved assets as required capital, which are considered as Investment (IG) securities. Now, it has been decided that foreign banks operating in Bangladesh, while complying with the aforementioned section of the Banking Companies Act, 1991, for the purpose of capital conservation only, may hold Investment (IG) securities in an amount higher than the investment ratio specified in the said Circular Letter, subject to the following conditions:

a) For the purpose of capital conservation, a declaration must be made in the submitted WI-5F statement that IG securities are also declared as Capital Conservation Instruments (CCI).

b) Any securities held in the IG portion that are not pledged as capital shall not be newly considered pledgeable for capital;

c) Securities pledged as capital shall not be considered as Liquid Assets (LA) and Current Assets (CA);

d) When determining the amount of securities available for sale and reclassifiable from the IG portion, the amount of securities pledged as capital shall be excluded to determine the amount of securities available for sale and reclassifiable.

e) Securities pledged as capital, similar to securities held in the IG portion, must be marked to market at year-end, and the decrease/increase in value shall be calculated in accordance with the instructions of D.O.S. Circular Letter No. 05/2008.

Kindly acknowledge receipt.

Yours faithfully,

Signed/-

(S. K. Sur Chowdhury) General Manager Phone: 7120376 12 Katir, 1416 27 October, 2009