Amid sluggish economic activity and limited lending opportunities, banks in Bangladesh have significantly increased their investment in the stock market, sparking optimism about market recovery and investor confidence.

According to Bangladesh Bank, banks’ stock market exposure on a standalone basis rose to 18.15% of their total capital by March 2025, up from 15.28% in December 2024. The combined exposure, including bank subsidiaries, also climbed from 23.23% to 27.15% during the same period.

Market analysts view this surge as a positive sign. The strategic investment by banks—during a period of market stagnation—has not only provided capital gains and dividends but also contributed to the recent rise in the DSEX index, which increased from 5,219.16 in March to 5,523.78 as of September 11.

Currently, 36 banks and their subsidiaries are directly involved in the stock market. Their contribution to DSE market capitalization has grown from 15.1% in 2023 to 18.7% in 2024.

While banks are investing well within legal limits—25% on a solo basis and 50% in aggregate, as per the Banking Companies Act, 1991—regulators emphasize the need for strict risk management to avoid past mistakes, referencing the 2010-11 crash caused by overexposure.

Experts suggest that the increase in bank investment is due to slow credit demand and excess liquidity, but stress that sustainable, long-term strategies—not short-term gains—will ensure stability and benefit the overall financial system.