Islami Bank Bangladesh Limited (IBBL) is going to float a bond to collect Tk 8 billion from the capital market for strengthening its capital base as well as investing in conventional businesses.
Meanwhile, Social Islami Bank Limited (SIBL) received the regulatory approval to raise Tk 6 billion from the stock market by issuing a bond.
The approvals came at a meeting of the Bangladesh Securities and Exchange Commission (BSEC) on Tuesday.
Apart from the two Shariah-based banks, the BSEC approved a Tk 7 billion bond in favour of Pubali Bank Limited.
According to the BSEC, the IBBL will issue the non-convertible bond with a face value of Tk 1 million per unit. It will mature in seven years. Financial institutions, insurance companies, institutional investors, corporate institutions, and high net worth individuals are eligible to invest in the bond.
The Islami Bank is going through a liquidity crisis as it faced a blow in its deposit base recently. It is now struggling to maintain the cash reserve ratio (CRR) as per the central bank requirement.
The stock market regulator, against such a backdrop, approved the bank’s proposal to collect the fund through the bond. It would help the bank strengthen its Tier-II capital base and invest in conventional businesses, the BSEC said. It is also expected to mitigate the liquidity crisis in the bank.
Social Islami Bank will issue Tk 6 billion bond with a face value of Tk 10 million per unit. It is a non-convertible, unsecured, mudaraba subordinated floating rate bond. The bank will also use the proceeds to strengthen its Tier-II capital base.
The SIBL is suffering from a liquidity crisis due to loan irregularities as well as decline in deposit.
A Chattogram-based company took over the two Shariah-based banks after buying shares through the capital market in 2017. But both the banks fell in crisis recently due to severe loan irregularities.