Bank borrowing eased for broker, merchant banks
The Bangladesh Bank has halved banks' general provisioning requirement to 1% against their loans for brokerage firms, stock dealers, and merchant banks.
It would be effective from 30 March this year, the central bank said in a circular issued in this regard on Thursday (2 February).
The move would help reduce provisioning pressure on banks which has been discouraging lending to the capital market firms for the last decade since the central bank imposed the provisioning out of perceived credit risk due to the volatile nature of the industry.
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Provisioning is when to build shock absorption capacity, lenders or investment firms have to set aside some of their profits as instructed by regulators. This drags down profits.
