The New Nation - Internet Edition

Staff Reporter

Bangladesh Bank has introduced a guideline allowing mortgaged-backed securities market in the country to create a new window of investment, officials said yesterday.

"We are trying to open a new window of investment through introducing the new market that will help leave a positive impact on the country's bond market," a BB senior official said.

"The overall bond and securitization market in Bangladesh has not yet flourished significantly. Especially, the concept of 'mortgaged backed securities market' is quite new," the central bank said in its guideline, circulated to the chief executives of all scheduled banks and financial institutions of the country.

However, in recent time, many lending banks, financial institutions, housing finance organizations and investors started showing their interests in the sector, according to the guideline. "Anticipating the future prospects of this sector, Bangladesh Bank as a facilitator and coordinator, feels the necessity to prepare an integrated policy guideline regarding this."

"Since each securitization itself is unique in terms of quality and procedural differentiation, banks and financial institutions may, therefore, customize their structuring model depending on the requirements of the investors and credit rating organizations," the guideline added.

Welcoming the central bank's move, the market players said the new initiative will help infuse dynamism into the country's nascent bond market and create a scope for diversifying the sources of fund.

"We are expecting the new move will give depth to the mortgaged backed securities market in the country," a senior official of Bangladesh Leasing and Finance Companies Association, said. "It will also help the banks and financial institutions to diversify their sources of financing and reduce asset-liability mismatch in their respective balance sheet."