B Mirror Report: Bangladesh Bank Governor Dr Ahsan H Mansur on Tuesday underscored the need for tougher regulation and stronger enforcement to rebuild investor trust and accelerate the growth of the country’s corporate bond market.
Speaking at a seminar titled “Bond Market Development in Bangladesh: Challenges and Recommendations,” jointly organised by Bangladesh Bank and the Bangladesh Securities and Exchange Commission (BSEC) in the capital, the governor said weak implementation of existing rules has severely undermined confidence among investors.
“In advanced markets, failure to pay even a single coupon is treated as a serious default. But in Bangladesh, companies often face little to no consequence for missing bond payments,” he said, adding that this culture of lax accountability has discouraged participation in the bond market.
Dr Mansur noted that restoring credibility would require firm regulatory actions and close supervision to safeguard investor interests.
To stimulate bond issuance, he said the central bank may also discourage excessive reliance on bank borrowing. Companies seeking loans beyond the single borrower exposure limit could be advised to raise funds through bonds or equity from the capital market instead.
He further pointed to several incentive measures to attract issuers, including tax benefits, faster approval processes and reduced issuance costs. Emphasising leadership from both the government and private sector, he said their active role is essential for bond market expansion.
The governor also proposed forming a central committee supported by multiple sub-committees to strengthen coordination among regulators and ensure smooth implementation of reforms.
BSEC Chairman Khondoker Rashed Maqsood said that bank financing remains more accessible than capital market funding in Bangladesh, contributing to limited bond market activity. He noted that high non-performing loans largely stem from mismatches between loan durations and funding sources.
“Our proposal encourages both corporations and the government to raise funds through the capital market. After consultations with stakeholders, we will finalise necessary bond market regulations,” he said.
Finance Secretary Khairuzzaman Mozumder said although the problem of double taxation has been addressed, fresh challenges have arisen in secondary bond trading due to frequent ownership changes.
“These tax complications cannot be resolved manually at every stage and appear to be software-related. Greater coordination between the NBR and BSEC is required,” he said.
He added that the government is also working to attract foreign investors to local currency bonds and has formed a committee to introduce secondary trading of savings certificates.
