Bangladesh Bank to inject Tk 8.56 billion into stock market

The Bangladesh Bank is pumping Tk 8.56 billion into the capital market to help it ride over a liquidity crisis.

Governor Fazle Kabir wrote to Finance Secretary Abdur Rauf Talukder on Thursday morning seeking permission on the fund injection through the Investment Corporation of Bangladesh or ICB.

The finance ministry gave the go-ahead to the central bank move in the afternoon.

In a letter to Rauf, Kabir said Tk 9 billion funds, which had been raised to safeguard the small investors’ interests under a scheme announced by the government in 2012, were distributed as loans in three equal instalments within October last year.

Until now, the bank received Tk 8.56 billion in repayment of the credit, including interests, and it wants to extend the term of the scheme from Dec 31, 2019 to Dec 31, 2022, according to the letter.

It was necessary to reuse the repaid money in order to prevent the ongoing downward trend in capital market transaction, the governor said.

He also asked the government to task a supervisory committee, formed with representatives from the central bank, Securities and Exchange Commission and ICB, to assess the feasibility of extensively distributing loans from the fund to merchant banks, brokerage houses, and other media in the stock market along with small investors who suffered losses.

In response to Kabir’s letter, Deputy Finance Secretary Mohammad Anisuzzaman Khan sent a letter permitting the central bank to reuse the fund formed after the 2010 share market debacle.

A group of investors uder the banner of Bangladesh Stock Market Unity Council demonstrating outside the Dhaka Stock Exchange at Motijheel on Wednesday against continuous fall in share prices.

The central bank has provided the money to the ICB at 5 percent interest rate while the ICB distributed it among the merchant banks and brokerage houses at 7 percent interest.

The merchant banks and brokerage houses are charging small investors 9 percent interest for loans from the fund.

“The liquidity crisis will ease and the market will return to normal once the huge money enters the market,” Bangladesh Bank spokesperson Serajul Islam told bdnews24.com.

DSE Brokers Association of Bangladesh President Shakil Rizvi said the capital market has already rebounded following Prime Minister Sheikh Hasina’s assurance of measures for its betterment.

“Now this Tk 8.56 billion will have more positive impact on the market,” the former Dhaka Stock Exchange chief said.

On Thursday, the DSEX at Dhaka Stock Exchange rose about 84 points or 1.61 percent to 5286 while CASPI at Chittagong Stock Exchange gained about 248 or 1.55 percent to 16160 after dipping to a 27-month low on Monday following continuous fall.