BSEC writes to IDRA to bring 26 insurers into stock market

The Bangladesh Securities and Exchange Commission (BSEC) has sent a letter to the Insurance Development and Regulatory Authority (IDRA) to ask 26 insurance companies to file for initial public offering (IPO) and take steps to invest 20 percent of equity in the stock market.

The letter, signed by BSEC Executive Director and Spokesperson Mohammad Rezaul Karim, was sent to IDRA Chairman Dr M Mosharraf Hossain on Tuesday.

The letter said: The stock market is controlled by small investors, with 80-percent market participation.

However, the role of institutional investors should be more in the development of the stock market. In this case insurance companies can play an important role.

The commission has given concessions on various issues to bring 26 insurance companies to the stock market. However, those companies have to invest 20 percent of equity to enter the stock market.

The gazette was published on January 5, 2021. But even then, the companies did not take any initiative to file for entry into the stock market and invest 20 percent of their equity.

Against the backdrop, the BSEC requested the IDRA to step in, as the insurance regulator, so that insurers submit files for IPO and invest 20 percent of equity to bring insurers to the stock market.

Earlier on March 23, the BSEC had written to 61 banks to invest out of their existing capacity to support the development of the stock market.

Then the BSEC letter said that on February 10, 2020, Bangladesh Bank had approved a special fund of Tk 200 crore to be invested in the stock market, which would not be included in the investment limit.

In addition, the Banking Companies Act allows each bank to invest up to 25 percent of its capital in the stock market. These include paid-up capital, share premiums, statutory reserves and retained earnings.