A powerful committee established by the Ministry of Finance has suggested A BDT 100 billion special fund to increase stock market liquidity and another BDT 30 billion fund to lend money to small investors at a 4% interest rate were proposed by the four-person committee, which was led by Anisuzzaman Chowdhury, Special Assistant to the Chief Adviser. Additionally, it recommended increasing institutional investor participation to 60% and making dividend income up to BDT 100,000 tax-free.

According to the committee’s proposal, removing long-inactive, non-operational, and dividend-failing listed companies from the main board of the stock market and placing them on a separate platform. The proposed name of this new platform is the ‘R Category’. This strict measure is being planned primarily to curb abnormal manipulation and speculation involving so-called rotten or junk shares in the market.

According to the committee’s proposal, very stringent rules will be imposed on trading of shares under the ‘R Category’. After purchasing these shares, investors will not be allowed to sell them for at least one month (lock-in period). In addition, while trade settlement for regular shares usually takes two to three days, the committee has proposed extending the settlement period to seven days for ‘R Category’ shares. The committee has recommended that the Financial Institutions Division, the BSEC, and the Dhaka and Chattogram Stock Exchanges be instructed to implement these rules swiftly.

At present, of the 397 companies listed on the DSE, 205 are in Category ‘A’, 82 in ‘B’, and 110 in ‘Z’. The committee believes that many companies in the ‘Z’ category have remained closed for years, yet their share prices are occasionally manipulated to rise abnormally. As an example, the state-owned Zill Bangla Sugar Mills was cited, whose share price jumped from BDT 82 to BDT 175 within just a few days. The introduction of the ‘R Category’ is being considered to prevent such irrational price surges.

According to DSE data, at least 32 companies have remained non-operational for a long period, most of them from the textile sector. Meghna PET Industries has been shut down since 2002—nearly 23 years. There are also several rental power plants and loss-making companies with no realistic prospects of resuming operations. The committee has suggested creating a dignified “exit plan” for such companies to leave the market.

For a long time, investors have complained that keeping closed companies on the main board undermines market stability. The introduction of the new ‘R Board’ or category is expected to reduce clutter in the main market and encourage investors to invest in comparatively safer stocks. The committee believes that long-term reform will only be possible through strengthening the capacity of ICB and ensuring good governance by the BSEC.