B Mirror Report:  Central Depository Bangladesh Limited (CDBL), the country’s sole electronic share depository, has moved to enter the mutual fund sector as a custodian in a bid to diversify its income sources. The company has already applied to the Bangladesh Securities and Exchange Commission (BSEC) for the required license.

However, CDBL is facing challenges in meeting several conditions set under the revised Mutual Fund Rules, raising uncertainty over the approval process unless the gaps are addressed quickly. The regulator has instructed the company to fulfill the outstanding requirements.

According to sources, BSEC recently sent a letter highlighting deficiencies in CDBL’s application submitted on February 25 under the 2025 rules. Missing documents include audited financial statements or auditor certification, complete credit information bureau (CIB) undertakings for the company and its directors, and affidavits related to loan defaults or violations of securities laws.

The company also failed to provide key operational details, including a dedicated custodian team, infrastructure readiness, logistics support, and website disclosures. Additionally, it has not submitted the appointment letter and credentials of a qualified compliance officer or confirmation of adequate capital under risk-based capital adequacy rules.

Under the revised framework, custodians now have expanded responsibilities beyond asset safekeeping, including maintaining unit-holder accounts and overseeing banking transactions functions previously handled by asset management companies.

BSEC has directed CDBL to complete its application in line with the relevant provisions of the Mutual Fund Rules, 2025.

Market analysts say prolonged weakness in the stock market has weighed on CDBL’s earnings, prompting the move. Lower trading volumes have reduced settlement fee income, while a cut in BO account maintenance fees from Tk 100 to Tk 50 further impacted revenue. Income from this segment fell to Tk 70 million in FY2025 from over Tk 130 million the previous year. Operating profit also declined by more than 17% to Tk 522 million.

CDBL Managing Director Md. Abdul Motaleb said the company is keen to operate as a custodian and expects to submit the required additional information within the next week.

BSEC spokesperson Md. Abul Kalam said the commission is open to granting the license but emphasized that all conditions must be met. He added that CDBL has already fulfilled the paid-up capital requirement of Tk 2 billion, and the license can be issued once the remaining criteria are satisfied.