Policies put Bangladesh Bank and BSEC at odds

0
215
Policies put Bangladesh Bank and BSEC at odds
Policies put Bangladesh Bank and BSEC at odds

Policies put Bangladesh Bank and BSEC at odds

Insiders and analysts fear that this may result in volatility in the capital market

Contractionary policies are putting the country’s bank and capital market regulators at odds with each other.

Insiders and analysts fear that this may result in volatility in the capital market.

Issuing of the Financial Institutions Act 1993 and the Corporate Governance Code 2018 have set Bangladesh Bank against Bangladesh Securities and Exchange Commission (BSEC.)

According to central bank sources, a letter they issued and sent to all the banks and non-bank financial institutions across the country, said that there was no obligation to adhere to the Corporate Governance Code, if the act contradicted with any order issued by the central bank, or any clauses stated in the Financial Institutions Act, including the governance code’s directions on forming nomination and remuneration committees.

The letters were sent to top officials of the banks last Thursday.

This new predicament rose due to several listed companies declaring undistributed dividends.

Bangladesh Bank says that under the Banking Companies Act, undisclosed dividends have no chance of going to a fund formed to stabilize the stock market.

Banks and financial institutions that have already deposited such funds in the fund will also have to return them, they added.

A merchant banker, preferring anonymity, acknowledged to Dhaka Tribune that some sections of the BSEC’s Corporate Governance Code contradicted the Financial Institutions Act 1993.

These two laws were not made at the same time. Even then, it is a mystery how they did it and why Bangladesh Bank has not said anything about it so far, he also said.

But now the central bank is giving the order amidst its rift with the BSEC. It will create chaos in the stock market. The two regulators should sit together and resolve the contradictory directives for the sake of investors, bankers added.

The order adds to a growing list of policy matters over which the two regulators have differing directives, which many analysts blame for a recent market fall.

On Monday, the DSEX, the benchmark index of Dhaka Stock Exchange (DSE), dropped 50 points.

In this regard, Bangladesh Bank spokesperson Serajul Islam said to the media: “One of the main responsibilities of Bangladesh Bank is to look after the interests of the depositors of the banks.”

“As part of this responsibility, various directives are issued at different times, which the banks abide by. No other government agency should stand in the way”, he added.

BSEC spokesperson Mohammad Rezaul Karim is currently in Manchester to attend the Bangladesh Trade and Investment Summit.

According to the Bangladesh Securities and Exchange Commission (BSEC), 3,315 suspended accounts have been found to have around Tk17,000 crore in unclaimed dividends.

To bring this amount back to the capital market, BSEC formed its first committee of the Capital Market Stabilization Fund (CMSF).

This approval (committee) came through an order issued by the BSEC on 22 August, 2021.

This board, headed by former principal secretary to the prime minister Nojibur Rahman, shall be responsible and accountable for the fund as per the rules.

LEAVE A REPLY

Please enter your comment!
Please enter your name here