Southeast Bank fined for investing in violation of the law

Staff Reporter: Bangladesh Bank has fined Southeast Bank Tk 10 lakh for over-investing in a company’s shares in violation of the Banking Company Act. The bank has invested in shares of National Life Insurance Company, exceeding the authorized 25% of its capital.

According to the data, the bank has bought about 24 lakh shares of National Life Insurance. In the last one year, the price of each share of the company was from Tk 210 to Tk 280.

In September this year, Bangladesh Bank asked Southeast Bank to bring down investment within the approved limits, but the bank did not follow the central bank’s instructions. Instead, the bank authorities tactfully transfer the shares they have to another account.

In this regard, the central bank sent a letter to Southeast Bank last month regarding the imposition of fines by Bangladesh Bank. At the same time, the bank will be fined Rs 50,000 per day until additional investment is adjusted.

M Kamal Hossain, managing director of Southeast Bank, said the investment had exceeded the maximum allowed due to rising share prices. The investment will be brought down within the limits.

The bank was fined after the central bank conducted an investigation into the bank’s investment in the stock market and identified a number of banks involved in the breach.

Earlier, the central bank had fined four banks – NRB Bank, NRBC Bank, Exim Bank and Premier Bank – for violating investment rules in the stock market.

Four more banks were warned that their approval of the stock market special fund would be suspended if any further violations were found in the future. The banks are Eastern Bank, Union Bank, Global Islami Bank and Agrani Bank.

It is to be noted that the issue of share manipulation in the insurance sector was widely discussed among the investors. According to the DSE, shares of 48 of the 53 listed insurance companies have risen from 100% to 750% in the last one year.

The price of junk and short-term stock has risen abnormally without any fundamental reason or improvement in financial condition or dividend declaration. The central bank’s inquiry has indicated that banks were behind the unusual rise in junk share prices in the last one year.


Source: Daily StockBangladesh by www.dailystockbangladesh.com.

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