NBFI can invest in the Alternative Investment Fund – Bangladesh Bank.
April 5, 2016.
Non-banking financial institutions (FI) can now invest in non-listed special purpose funds registered with the Bangladesh Securities and Exchange Commission (BSEC), such as Alternative Investment Funds, Special Purpose Vehicles, and other similar funds. Bangladesh Bank approves such investments under DFIM Circular No.04, issued March 30, 2016.
On November 24, 2015, the Bangladesh Bank issued a similar circular permitting commercial banks to invest in these funds.
FI should adhere to the following guidelines while investing in non-listed special purpose funds:
1. Any FI’s total investment in such funds may not exceed 50% of its paid-up capital.
2. Any FI’s investment in such a single fund may not exceed 10% of its paid-up capital or 20% of that specific fund, whichever is less.
3. The investment choice in such funds must be approved by the Board of Directors of FIs, and before making a commitment to invest, FIs must receive approval from the Bangladesh Bank (BB). In this regard, FIs must provide BB with the most recent information on capital, liquidity, quality, and number of assets and liabilities, as well as any information linked to the aforementioned funds (including the clause 4 statement).
4. The trustee of the fund must certify that:
a. Such funds shall not make any investment to purchase the shares/debentures/bonds or any other instruments of investor FI and its linked party.
b. The fund has no financial claim over any bank or financial institution, and no investment will be made that could result in such a claim in the future.
5. Investments in such funds are exempt from the limit specified in Section 16 of the Financial Institutions Act, 1993.