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The Bangladesh Bank and five state-owned banks were yet to give state-run Investment Corporation of Bangladesh a total of Tk 2,000 crore in loans for the purpose of investing in the ailing capital market.
Earlier on September 19, ICB sought Tk 1,000 crore in loans from the central bank for the development of the capital market.
It also sought Tk 200 crore from each of the five state-owned banks — Sonali Bank, Rupali Bank, Janata Bank, Agrani Bank and Bangladesh Development Bank — as term deposit loans to improve the current condition in the stock market in the first week in October.
The BB sent a number of queries to ICB about potential of the loans and investment plans.
ICB had replied to the queries, but the BB was yet to provide the loan to the state-run non-bank financial institution. The loans were supposed to be given in any form with low interest rate to be paid annually.
ICB officials said the five SOBs were not responding to ICB’s pleas.
ICB managing director Abul Hossain told New Age that the banks were yet to give the much-needed fund to ICB.
ICB has sought the funds from the five SOBs to invest in the capital market to halt the continued plunge in share prices and revive the investors’ confidence in the market, he said.
Hossain said that ICB was hopeful that the central bank would soon provide the loan for the interest of the capital market.
The market has been falling for last nine months that resulted in a 1,268-points plunge in DSEX, the core index of the Dhaka Stock Exchange.
The plunge eroded Tk 65,643 crore in market capitalisation.
On October 29, the DSEX hit a three-year low at 4,670.74 points after November 22, 2016 when it was at 4,665.35 points.
Stakeholders said that the fund would support the market in the ongoing crisis.
Market intermediaries, experts and also the regulators agreed that the plunge in the stock market was continuing due to lack of confidence of investors.
To revive confidence of investors immediately, there is no option but injecting funds in the market, they said.
Market experts said that only one organisation could not turn around the market. Coordinated step from all intermediaries and regulators is a must, they said.
ICB has been given approval for issuing Tk 2,000 crore bonds to invest in the capital market but that could not impact on the market.
On September 22 this year, the BB created scope for the scheduled banks for borrowing from the central bank in the form of repurchase agreement (REPO) at the rate of 6 per cent interest for investments in the capital market.
Only The City Bank has so far availed the facility from the central bank.
Apart from the REPO facility to the banks, the central bank has also excluded banks’ investments into the non-listed securities from their capital market exposure to offer banks more space to invest in the capital market.
Despite the facilities, the market could not turn around as the capacity of the institutional investors drastically reduced and retail investors could not absorb further losses.
Market experts said widespread wrongdoings, absence of governance and proper regulatory actions, approval of fundamentally weak initial public offerings and several decisions to appease vested quarters were behind the continued erosion of the investors’ confidence in the stock market.
(NA)
