BRAC Bank PLC has decided to surrender its trustee registration for mutual funds to comply with updated regulations, a move that could have wider implications for the country’s struggling fund management industry.
The bank, acting in its capacity as a trustee, has submitted an application to Bangladesh Securities and Exchange Commission seeking formal approval for the surrender, according to officials.
Shaheen Iqbal, additional managing director and head of Wholesale Banking at the bank, confirmed the development, saying a public notice has already been published to inform stakeholders of the decision to surrender the trustee licence.
Under the latest mutual fund regulations, banks are no longer allowed to act as both custodian and trustee for the same fund. BRAC Bank, which has primarily operated as a custodian and never served as a trustee, said it will continue focusing on that role to remain fully compliant with regulatory directives.
Market data shows several institutions—including Eastern Bank PLC, Agrani Bank, Investment Corporation of Bangladesh and Grameen Bank—currently act as trustees for mutual funds in Bangladesh.
Industry insiders have expressed concern over the move, noting that BRAC Bank’s exit from the trustee segment could weaken confidence, given its reputation for strong governance and transparency.
They argue that the withdrawal of a credible institution from the trustee segment could further dent confidence in an industry already grappling with longstanding challenges.
The mutual fund sector has been under pressure in recent years due to allegations of malpractice and fund mismanagement, eroding investor trust and dragging down asset values.
Currently, Bangladesh has 38 closed-end and 90 open-end mutual funds in operation. The total asset base of closed-end funds stands at around Tk4,650 crore, while open-end funds account for Tk4,978 crore. Combined, the sector’s value fell to Tk9,628 crore in FY2024–25, down from Tk10,729 crore a year earlier.