The DSE Brokers Association of Bangladesh (DBA), an organization of stock brokers in the capital market, has recommended extending the deadline for Bangladesh Bank’s special fund for investment in the capital market until 2030. It has also recommended increasing the size of the special fund.
The recommendation was made in a letter signed by the organization’s president, Saiful Islam, to Bangladesh Bank Governor Dr. Ahsan H. Mansur on Tuesday (January 28).
It said that the capital market of Bangladesh is going through a challenging period. Since the end of 2021, our market has been in a prolonged recession, which has resulted in a significant decline in equity market capitalization (about 40%, or Tk 2,300 billion). This recession has affected more than two million investors, including institutional investors (such as banks, financial institutions, insurance companies and mutual funds) and market intermediaries, stockbrokers and other stakeholders.
The letter further said that under this fund, many reputable scheduled banks have invested in their own portfolios in the capital market. In the current market situation, their portfolio investments have faced losses ranging from 40% to 60%. Closing such funds at this time will cause significant losses in portfolio accounts and will have a negative impact on the capital market including investors.
It said, “Considering the market context, we have recommended to the Governor to increase the size of this fund by an additional Tk 100 crore to Tk 300 crore for each scheduled bank by extending the period of that special fund until 2030. We hope that considering the situation, he will consider our recommendation in the overall interest of the capital market.” It is to be noted that in order to stabilize the capital market and increase the liquidity flow in the market, Bangladesh Bank issued instructions on February 10, 2020 to provide a special fund to scheduled banks, financial institutions and capital market intermediaries, brokerage houses and merchant banks, for investment in the capital market. The size of this special fund was limited to Tk 200 crore for each scheduled bank. The term of the fund is going to end on February 9, 2025.
