Bangladesh Bank has announced a major restructuring plan in the country’s financial sector. As part of this initiative, it has decided to merge five weak Shariah-based banks into a single new bank. Additionally, the process has begun to shut down nine long-troubled non-bank financial institutions (NBFIs).
This significant reshuffle involving 14 institutions has triggered anxiety among stock market investors, as many of these entities are listed on the stock exchange, with thousands of small investors’ funds tied up in them.
Surprisingly, the Bangladesh Securities and Exchange Commission (BSEC)—the regulatory body meant to protect investors—has been completely sidelined in this process. With no official communication reaching investors, the stock market has been under continued downward pressure. Share prices of these institutions have dropped by 50 to 60 percent over the past two months.
The Financial Institutions Division (FID) under the Ministry of Finance has formed an eight-member committee for the bank merger. However, shockingly, no representative from BSEC was included in this committee.
Any major decision involving listed companies has a direct impact on the market, yet no formal announcement has been made on the stock exchange websites. As a result, the companies are unable to disclose the developments as Price Sensitive Information (PSI).
Market analysts warn that making such a major decision without informing investors creates serious risks. They stress that BSEC must be involved in such processes to uphold investor confidence. Especially when listed banks or NBFIs are being merged or shut down, there should have been prior disclosure about investor safeguards.
Saiful Islam, President of the DSE Brokers Association, stated:
“Bank mergers are a very sensitive matter. Keeping investors in the dark was not right. The stock exchanges should have taken the lead in protecting investor interests, but they didn’t.”
Bangladesh Bank, on the other hand, has stated that the process is still in its early stages. Spokesperson Arif Hossain Khan mentioned that all stakeholders will be consulted gradually. Meanwhile, BSEC spokesperson Abul Kalam said that when the matter officially comes to them, necessary steps will be taken to protect investors’ interests.
However, market insiders believe that since investors’ money is at stake, it is crucial to include investor representatives from the beginning. Otherwise, such decisions regarding mergers or closures may deepen the crisis of trust in the market, with retail investors bearing the brunt of the losses.
