The central bank has issued policies allowing non-listed companies to get capital from the banks and non-banking financial institutions (NBFIs) indirectly, officials said.

Country's non-banking financial institutions (NBFIs) can now invest maximum 50 per cent of their paid-up capital in funds like Special Purpose Vehicle (SPV) and Alternative Investment Fund (AIF), they added.

The Bangladesh Bank (BB) has already issued a circular in this regard and asked the managing directors and the chief executives of all NBFIs to follow the latest instruction for investment in such funds.

Earlier on November 24 last, the central bank issued a similar instruction allowing the commercial banks to invest maximum Tk 2.0 billion in such funds.

These non-listed funds are established to invest in shares and securities of non-listed companies, according to the BB officials.

"Now the banks and NBFIs are allowed to invest indirectly in the share and securities of non-listed companies," a senior BB official told the FE Thursday.

He also said the companies which are not listed with the stock exchanges or facing difficulties in getting bank loans for various reasons will now be able to receive capital from such funds.

"We expect that such policies will help bring dynamism in the country's business activities as well as the primary capital market," the central banker noted.

Talking to the FE, another BB official said the central bank has created a new window for investment by the NBFIs through issuing the directive.

He also said the NBFIs may take the opportunity for making investment of their excess liquidity in such funds, which are registered with the Bangladesh Securities and Exchange Commission (BSEC).

"Investment in such funds shall not be included in the capital market investment under the Financial Institution Act, 1993 of the investor NBFI," the BB official explained.

Investment in such a single fund made by any NBFI, however, must not exceed 10 per cent of its paid-up capital or 20 per cent of that particular fund, whichever is lower, according to the circular.

Before making any firm commitment to investment in such funds, the investor NBFI will have to apply for permission from the central bank, it said, adding that the decision on investment in such funds must be approved by the board of directors of the NBFIs.

The NBFIs will also have to submit their latest information on capital, liquidity, quality and quantity of assets and liabilities along with all information related to the funds to the central bank.

The trustee of the fund will have to declare that no investment will be made to purchase share, debenture, bond or any other instruments of investor NBFI and its related party by such funds.

The trustee of the fund will also have to declare that the fund has no financial claim over any bank and NBFI, and no investment will be made that may create such claim over any bank or NBFI in future, the circular added.

The BSEC earlier had approved Special Purpose Asset-back Securities Issuing Policy and the 'Bangladesh Securities and Exchange Commission (Alternative Investment) Rules 2015' to promote the venture-financing and equity-investment facilities for non-listed local firms having fund shortages.

Under the rules, alternative investment funds will have to be managed professionally by the fund managers and the trustees.

Both the trustees and fund managers will have to be registered with the securities regulator.

According to the rules, the trustees will raise funds from eligible investors, who may be Bangladeshi, foreign and non-resident Bangladeshis (NRBs), by issuing units.

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Source: The Financial Express