Brac Bank to raise Tk 600cr thru bonds

Brac Bank has decided to raise Tk 600 crore by issuing a non-convertible bond with a view to providing home loans to the country's lower and middle income groups.

The board of the private lender took this decision at a meeting on August 26, after which it sent the proposal to the Bangladesh Securities and Exchange Commission (BSEC) for approval.

Individuals and entities who will invest in the fund will enjoy an interest rate of 5.5 per cent with a maturity period of five years.

The minimum amount of the investment in the instrument will be Tk 10 lakh, a senior official of Brac Bank said.

Foreign investors will also be allowed to invest in the securities.

Non-convertible bonds are considered a category of debt which cannot be converted into equity or stocks.

The bonds have a fixed maturity date and the interest can be paid along with the principal amount on either a monthly, quarterly, or annual basis depending on the fixed tenure specified.

The lower-and-middle income groups of the country will get loans from the fund mobilised by the bond.

The repayment tenure of the housing loans will range between 10 and 20 years and the interest rate will be set as per Bangladesh Bank's rules.

This means the highest interest rate charged cannot surpass 9 per cent.

The bank is yet to fix a ceiling on the loan amount one can receive from the scheme.

The official also said that Brac Bank will need approval from both the BSEC and Bangladesh Bank to issue the bond.