B Mirror Report: The Bangladesh Securities and Exchange Commission (BSEC) is taking several initiatives to reduce corporate dependence on bank loans and attract large domestic and multinational companies to the capital market.

Around 75% of corporate financing in Bangladesh comes from banks, according to IDLC Investments Managing Director Mesbah Uddin Ahmed. To diversify funding sources, the regulator is engaging directly with major companies, reopening the direct listing route after 16 years and working to shorten the initial public offering (IPO) approval process.

On October 5, the Financial Institutions Division withdrew a 2010 directive on direct listing, reopening the route for government-owned, private and foreign companies. The BSEC had approved the draft Direct Listing of Securities by Stock Exchange Rules, 2026, on September 1.

Under the proposed framework, eligible companies will be able to list existing shares without issuing new shares through an IPO. However, direct listing will not provide fresh capital to the companies, as proceeds will go to selling shareholders.

BSEC Chairman Masud Khan said the commission was restructuring the pre-application review process and strengthening the accountability of auditors and stock exchanges. The regulator aims to reduce IPO approval time from the previous 18–24 months to just three months.

The commission is also considering a Dutch auction-based price discovery mechanism to replace the existing book-building system, allowing share prices to reflect investor bids and market demand.

Alongside equity market reforms, the BSEC is prioritising corporate bond market development and efforts to channel long-term institutional funds, including pension, gratuity and life insurance funds, into the capital market.

Dhaka Stock Exchange Chairman Mominul Islam said the country’s market capitalisation remains below 8% of GDP, with a target of raising it to 20% by 2030. Achieving that goal will require more large, financially sound companies to list, alongside the expansion of corporate bonds and government securities markets.