DOS Circular Letter No. 27: Constitution of Special Fund for Capital Market and Investment Policy

Bangladesh Bank
(Central Bank of Bangladesh)
Head Office
Motijheel, Dhaka-1000
Bangladesh
09 Ashwin, 1427 Bangabda
DOS Circular Letter No. 27 Date: ------------------------- 24 September, 2020 Managing Director/Chief Executive Officer All Scheduled Banks operating in Bangladesh. Dear Sir, Reference is drawn to DOS Circular No. 01 dated 10 February, 2020, issued by Bangladesh Bank regarding the formation of a Special Fund for investment in the capital market and investment policy. Through the aforementioned circular, instructions were provided to Scheduled Banks regarding the formation of a Special Fund for investment in the capital market and investment from such funds.

2. In order to align with the changing conditions of the money market, the following decisions have been taken regarding certain instructions of the aforementioned circular:
   a) The interest rate specified in clause 1(g) of DOS Circular No. 01/2020 for raising funds through the repo facility for the formation of the Special Fund will be 4.75% instead of 5.00%; b) Clause 2(eng)(3) of the aforementioned circular will be replaced as follows:
   i. For Listed Corporate Bonds/Debentures:
   a) Fixed Rate: Minimum 10.00% coupon/interest-bearing; b) Variable Rate: The minimum interest rate shall not be lower than the highest issued (10-year maturity Treasury Bond interest rate + 1.00%) available in the immediately preceding month of the coupon payment;
   ii. Government Bonds or Bills of any maturity;
   iii. For Asset-Backed Bonds/Notes:
   a) Fixed Rate: Minimum 8% coupon/profit-bearing; b) Variable Rate: The minimum profit or interest rate shall not be lower than the highest issued (10-year maturity Treasury Bond interest rate + 0.50%) available in the immediately preceding month of the coupon payment.

3. These instructions will take effect immediately. Other instructions of DOS Circular No. 01/2020 will remain unchanged. However, the new rate will apply to existing repos under the aforementioned circular upon their maturity.

Yours faithfully,
(Md. Nurul Amin)
Deputy General Manager
Phone No.: 9530093
Department of Off-Site Supervision