NRBs, foreigners allowed investing in open-end MFs
The Bangladesh Bank on Thursday allowed Non-Resident Bangladeshis and foreigners to invest in open-end mutual funds from the balances in their non-resident taka accounts.
The central bank created the opportunity with a view to widen the scope of investment for the NRBs and foreign investors subject to a number of conditions.
A BB circular issued on the day said, ‘The balances held in NITAs of non-residents can be used to purchase units of open-end mutual funds as “over the counter (OTC) products”.’
A BB circular issued in this regard said that the investments would be allowed only in open-end mutual funds which would be operated under the authorisation of the Bangladesh Securities and Exchange Commission.
Non-resident investors would only be allowed to invest in units of open-end mutual funds which have received approval from the BSEC.
Within 14 days of issuing units of the MFs, the asset managers of the MFs were asked to inform the BB’s foreign exchange investments department.
The authorised dealers of the banks were allowed to credit the NITAs with the dividend income from the MFs after deduction and payment of the applicable taxes.
The BB also allowed the banks to credit the NITAs with the sale proceeds of the units of MFs on receipt of approval from the central bank.
However, an application along with a valuation report of the funds must be prepared by merchant banks or chartered accountants if the weekly net asset value of the MFs were published irregularly or the underlying investments in unlisted shares or securities exceeded 30 per cent of the total fund.
In other cases, a recommendation letter from the trustee on the fair value of the fund must be sent to the central bank.
The banks were also allowed to freely transfer dividend and sale proceeds to the NITAs upon written prayers to fund managers by the unit holders.
In case of unit sale proceeds transfer, the banks were asked to inform the central bank.
