Commercial banks with merchant banking or brokerage operations get four months more or until Dec 31 to bring down their loans to such subsidiaries to single borrower exposure limit.
The Bangladesh Bank in its move to restore investors' confidence in the capital market extended the deadline, the central bank said on Thursday.
The central bank issued a circular in the day to inform all the banks of its decision.
The circular titled, "Regarding adjustment of additional loans to the banks' own subsidiaries created for merchant banking and brokerage operations under the single borrower exposure limit' says different banks have created subsidiary entities at their own funding for merchant banking and brokerage operations.
"As the banks have diverted to alternative programmes, the funds provided to them have become their loans," it says.
But these loans in most cases have crossed the 'single borrower exposure limit' meaning that merchant banks have crossed the maximum permissible amount a bank can usually lend to a single borrower, the circular said.
Following applications by the banks, the central bank gave them from June to August this year to readjust the loans by phases.
The Bangladesh Bank in its move to restore investors' confidence in the capital market extended the deadline, the central bank said on Thursday.
The central bank issued a circular in the day to inform all the banks of its decision.
The circular titled, "Regarding adjustment of additional loans to the banks' own subsidiaries created for merchant banking and brokerage operations under the single borrower exposure limit' says different banks have created subsidiary entities at their own funding for merchant banking and brokerage operations.
"As the banks have diverted to alternative programmes, the funds provided to them have become their loans," it says.
But these loans in most cases have crossed the 'single borrower exposure limit' meaning that merchant banks have crossed the maximum permissible amount a bank can usually lend to a single borrower, the circular said.
Following applications by the banks, the central bank gave them from June to August this year to readjust the loans by phases.