At present, banks' exposure limit in the stock market is calculated on the market price instead of the cost price. As a result, if the stock market index or share price increases, the exposure limit of the bank is exceeded.
So, banks are forced to sell shares to stay within this limit. As a result, the index fell due to selling pressure in the bullish stock market.
Banks are major institutional investors in the bourses of Dhaka and Chattogram, their selling pressure hinders the market rallies every now and then.
Banks can invest in listed securities up to 25 per cent of their equity on a solo basis and 50 per cent on a consolidated basis, according to the Bank Companies Act.