B Mirror Desk : In the stock market of Bangladesh, unpaid losses or negative equity against investors’ margin loans are major issues. The predicted total negative equity of several merchant banks and brokerage companies as of October 31, 2024, is Tk 7,824.18 crore. The 2010 stock market meltdown made this issue worse, and over the past 15 years, it has grown to be a significant financial burden.
To resolve this problem, the Bangladesh Securities and Exchange Commission (BSEC) has sought the assistance of the Financial Institutions Division of the Ministry of Finance. BSEC believes that it will be possible to resolve this problem related to negative equity through effective advice from the Financial Institutions Division. In this regard, they have also requested to convene a meeting of the members of Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE).
Recently, a letter in this regard was sent by BSEC to the Secretary of the Financial Institutions Division of the Ministry of Finance. The letter states that due to the sudden fall in the price of securities in the stock market in 2010 and subsequent years and various unusual events, the amount of unpaid losses as margin of investors is increasing and it has been carried forward as negative equity for a long time.
According to BSEC sources, as of October 31, 2024, the total margin loan amount to investors from 1,74,467 margin BO accounts by DSE and CSE member brokerage houses and merchant banks is Tk 18,128.70 crore.
Brokerage houses that are members of the DSE have provided Tk 11,545 crore in margin loans, with Tk 6,336.13 crore in negative equity. The size of the margin loans made by merchant banks and brokerage houses that are CSE members is also noteworthy.
In accordance with its March 27 directives, BSEC has suggested extending the provisioning period until 2030 in an effort to boost investor confidence and address the negative equity position. With the Financial Institutions Department’s assistance, BSEC expects to effectively contribute to the resolution of the negative equity issue.
