In several cases, the two regulators, the banks and the capital market regulators, have been at loggerheads for months. In such a situation, Bangladesh Bank, the regulator of the banking sector, has sent a letter on 10 November asking for information about the assets and liabilities of the asset management companies. The Bangladesh Securities and Exchange Commission (BSEC) has sent a counter letter to the central bank. This is expected to widen the gap between Bangladesh Bank and BSEC.
The central bank gives letters to the managing directors (MDs) of asset management companies. Eight days later, on 16 November, the capital market regulator BSEC sent a counter letter to Bangladesh Bank Governor Fazle Kabir. The letter asked the central bank to refrain from asking companies for such information.
The letter from Bangladesh Bank stated that the information was sought in compliance with the recommendations of the International Monetary Fund (IMF). It said financial survey activities should include assets and liabilities of other financial institutions (OFCs). Some changes, refinements and additions have been made in the survey form. In the letter, the assets and liabilities of the asset management companies as well as the assets and liabilities of the mutual funds managed by the companies will be required, said Bangladesh Bank.
According to BSEC sources, a total of 51 asset management companies have been licensed and registered from 2001 to 2021. Of these, 41 companies are operational and 10 are inactive. Effective companies are currently managing assets worth around Tk 13,000 crore. Apart from this, there are 21 more asset management companies.
Hasan Imam, president of the Association of Asset Management Companies and Mutual Funds (AAMCMF), said the decision to provide the information sought by the central bank would be taken in consultation with the BSEC.
The BSEC letter to the Governor on the basis of the letter given by Bangladesh Bank to the asset management companies said that the capital market is very sensitive. They act as regulators of the intermediaries involved in this market. The information held by every mediating entity, individual and party may be price sensitive, which may not be provided and disclosed to any other individual or entity without the approval of BSEC or in any other manner approved by it. Section 19 of the existing Securities and Exchange Ordinance, 1989, obliges to maintain the confidentiality of such information.
When contacted, BSEC chairman Shibli Rubaiyat-ul Islam said on Tuesday, “We have informed everything by letter to Bangladesh Bank.” The other three did not want to say anything.
If any information is required from the intermediaries associated with the capital market, it has been asked to collect it through BSEC. The BSEC said, “Considering the sensitivity of the capital market and maintaining the stability of the market, the cooperation of all is required to refrain from seeking any information, data or report directly from any person or organization concerned in the capital market.”
Talking to Prothom Alo , the responsible officials of BSEC said that the defaulted debt has again exceeded one lakh crore rupees. The capital base of the banks is weak, there is a lack of good governance in the whole sector. But avoiding the main work, Bangladesh Bank has now become more focused on capital market related issues. Sometimes the central bank intervenes outside its jurisdiction, which can send the wrong message.
A top official of the BSEC said that the letter from Bangladesh Bank violated the general practice of regulatory bodies in seeking information. As BSEC seeks refuge in Bangladesh Bank to know the CIB information of any person or organization, it does not say anything directly to that person or organization. A letter was also sent to the Insurance Development and Regulatory Authority (IDRA) seeking information about the insurance company.