Bangladesh's bond market one of the smallest in Asia. What will strengthen it? | The Business Standard
Skip to main content
  • Latest
  • Economy
    • Banking
    • Stocks
    • Industry
    • Analysis
    • Bazaar
    • RMG
    • Corporates
    • Aviation
  • Videos
    • TBS Today
    • TBS Stories
    • TBS World
    • News of the day
    • TBS Programs
    • Podcast
    • Editor's Pick
  • World+Biz
  • Features
    • Panorama
    • The Big Picture
    • Pursuit
    • Habitat
    • Thoughts
    • Splash
    • Mode
    • Tech
    • Explorer
    • Brands
    • In Focus
    • Book Review
    • Earth
    • Food
    • Luxury
    • Wheels
  • More
    • Sports
    • TBS Graduates
    • Bangladesh
    • Supplement
    • Infograph
    • Archive
    • Gallery
    • Long Read
    • Interviews
    • Offbeat
    • Magazine
    • Climate Change
    • Health
    • Cartoons
  • বাংলা
The Business Standard

Tuesday
June 10, 2025

Sign In
Subscribe
  • Latest
  • Economy
    • Banking
    • Stocks
    • Industry
    • Analysis
    • Bazaar
    • RMG
    • Corporates
    • Aviation
  • Videos
    • TBS Today
    • TBS Stories
    • TBS World
    • News of the day
    • TBS Programs
    • Podcast
    • Editor's Pick
  • World+Biz
  • Features
    • Panorama
    • The Big Picture
    • Pursuit
    • Habitat
    • Thoughts
    • Splash
    • Mode
    • Tech
    • Explorer
    • Brands
    • In Focus
    • Book Review
    • Earth
    • Food
    • Luxury
    • Wheels
  • More
    • Sports
    • TBS Graduates
    • Bangladesh
    • Supplement
    • Infograph
    • Archive
    • Gallery
    • Long Read
    • Interviews
    • Offbeat
    • Magazine
    • Climate Change
    • Health
    • Cartoons
  • বাংলা
TUESDAY, JUNE 10, 2025
Bangladesh's bond market one of the smallest in Asia. What will strengthen it?

Bangladesh

Sakhawat Prince & Jebun Nesa Alo
25 January, 2024, 09:30 am
Last modified: 25 January, 2024, 12:54 pm

Related News

  • America’s cold shoulder to foreign students is worrying Asia
  • How Asia can revolutionise food systems before it’s too late
  • Asia is contemplating a growing nuclear future
  • Buet, Daffodil top among Bangladeshi universities in THE Asia Rankings
  • Bangladesh pivots to Asia, seeks stronger trade ties amid global shifts

Bangladesh's bond market one of the smallest in Asia. What will strengthen it?

Bankers and economists point to the absence of specific policies, robust insurance companies, reliable asset managers, independent rating agencies, and concerted efforts to rebuild investor trust as key roadblocks to a thriving bond market in Bangladesh.

Sakhawat Prince & Jebun Nesa Alo
25 January, 2024, 09:30 am
Last modified: 25 January, 2024, 12:54 pm
Infograph: TBS
Infograph: TBS

The bond market serves as a critical lifeline for developing countries worldwide, channelling funds to finance government expenditures and providing capital for businesses to flourish. However, in Bangladesh it lags far behind its Asian peers.

Bangladesh's bond market, encompassing both government securities and corporate bonds, constitutes only 11.63% of its GDP, with government securities making up 11.5%, which is 125% in Malaysia, 107% in China, 150% in South Korea.

Thailand, the Philippines and Singapore also remarkably developed their bond markets.

Bangladesh stands far behind with the private sector sharing a paltry 0.19% in bonds, while corporate bonds account for 25% of India's GDP. 

The Business Standard Google News Keep updated, follow The Business Standard's Google news channel

Bankers and economists point to the absence of specific policies, robust insurance companies, reliable asset managers, independent rating agencies, and concerted efforts to rebuild investor trust as key roadblocks to a thriving bond market in Bangladesh.

The experts also noted that a lack of substantial participation from corporate institutions hinders the bond market's development. This is primarily due to their heavy reliance on bank loans for capital. Introducing smaller, highly liquid bond units in the capital market could be a key driver of growth, attracting significant new investment, they felt. 

Many governments in developed economies issue bonds to finance major projects. However, in Bangladesh, both the government and industries rely heavily on bank loans. 

Birupaksha Paul, professor of economics at SUNY Cortland in the United States, told The Business Standard, "Our banking sector is characteristically defective. The banking system is not allowing the bond market to grow."

He said it is very difficult to default by taking money from the bond market because it must meet the financial requirements. Since it is easy to take money from banks and avoid paying them back, everyone turns to banks.

"Our corporates have very little exposure to the bond market," he added. "When there is uncertainty in the country's economy, people do not want to invest in the long term. Developing countries have economies with good governance and less uncertainty, so their bond markets are strong. If we also want to make it strong, we have to carry out reforms in those places."

"Some of our bank rules are not suitable," he said, adding that what was needed for the bond market was done for banks. The policies needed for long-term financing are being implemented in the short term. It is unethical to do so.

What is needed to strengthen the bond market?

Ershad Hossain, managing director of City Bank Capital Resources, said both the government and industries want to take loans from banks in the long term. Since about 75% of banks' deposits are short-term, they face various types of crises by making long-term investments, Ershad Hossain said.

"To strengthen our bond market, we have to create customer trust; insurance companies have to be more compliant, asset management companies have to be strengthened, and credit rating agencies have to bring more transparency," he told TBS.

Insurance companies generally collect premiums from policyholders for long-term periods, while asset management companies can invest for the long term because there is no pressure to pay their liabilities in a short period of time, Ershad Hossain said.

Professor Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue, told TBS that the governance of the capital market and banking sector should be further enhanced for the bond market to grow. Customers will be attracted if they are offered long-term investment benefits and assured about the return of their investment.

"We have massive non-performing loans in the banking sector, but it cannot be said customers will rush to the bond market. Financial sector management, good governance in the financial sector and stock market should be strengthened. If the bond market is strong, institutions and individuals will come forward. The bond market is a good way of moving from debt to equity," he added.

A Bangladesh Bank official said, "If we want to popularise the bond market, bond units should not be more than Tk5,000. And common people should be allowed to buy bonds."

A general investor cannot afford a Tk1 lakh bond. So, the face value should be reduced to make it popular among commoners, he added.

Bond market needs to be strengthened from the supply side as well with provision for investing provident fund assets and introducing fixed income mutual funds in this market, the central banker suggested.  

What BB did to strengthen bond market

In July 2023, an IMF delegation conducted a feasibility study on developing the country's bond market. During their visit, they held discussions with stakeholders involved in bond issuance and settlement to evaluate the potential for local currency bond market development.

In December 2019, the Bangladesh Bank and the Bangladesh Securities and Exchange Commission (BSEC) took initiatives to facilitate the trading of T-bonds on the Dhaka Stock Exchange (DSE) and Chattogram Stock Exchange (CSE) alongside the existing BB's Electronic System (MI Module).

In order to protect the interests of investors and the market as a whole and to harmonise the secondary market of G-sec, "Guidelines on the Secondary Trading of Government Securities" were issued in June 2023.

The central bank has also introduced the Islamic Bank Liquidity Facility for Sharia-based banking systems in Bangladesh. 

Considering the need for a credible benchmark and the trend in global reformation of benchmarks or reference rate, the Bangladesh Bank has taken the initiative to publish credible and robust money market reference rates (both interbank risk free reference rate and unsecured reference rate) in near future.

The total outstanding debt of the government against Treasury bills and bonds was Tk4.89 lakh crore at the end of June 2023. Of this, Treasury bonds account for Tk3.66 lakh crore and Islamic Sukuk bonds for Tk18,000 crore.

On 27 December, the 20-year Treasur y bond rate reached 11.20%.

Top News

bonds / Asia

Comments

While most comments will be posted if they are on-topic and not abusive, moderation decisions are subjective. Published comments are readers’ own views and The Business Standard does not endorse any of the readers’ comments.

Top Stories

  • Chief Adviser Muhammad Yunus and BNP Acting Chairman Tarique Rahman. Photos: Collected
    Yunus-Tarique meeting in London on Friday can be a major turning point: Fakhrul
  • An Israeli soldier passes a bun to Greta Thunberg onboard the Gaza-bound British-flagged yacht ‘Madleen’ after Israeli forces boarded the charity vessel as it attempted to reach the Gaza Strip in defiance of an Israeli naval blockade, in this still image released on June 9, 2025. Israel Foreign Ministry via X/Handout via REUTERS
    Greta Thunberg deported from Israel after Gaza aid boat seized
  • Photo shows the Land Cruiser Prado car belonging to former member of parliament (MP) Anwarul Azim Anar found in Kushtia. Photo: TBS
    Luxury car of ex-AL MP Anar, who was killed in Kolkata, found in Kushtia

MOST VIEWED

  • On left, Abdullah Hil Rakib, former senior vice president (SVP) of BGMEA and additional managing director of Team Group; on right, Captain Md Saifuzzaman (Guddu), a Boeing 787 Dreamliner pilot for Biman Bangladesh Airlines. Photos: Collected
    Ex-BGMEA SVP Abdullah Hil Rakib, Biman 787 pilot Saifuzzaman drown in boating accident in Canada
  • A photo showing the former president on his return to Dhaka today (9 June). 
Source: Collected
    Former president Abdul Hamid returns to Bangladesh from Thailand
  • File photo of Eid holidaymakers returning to the capital from their country homes/Rajib Dhar
    Dhaka: The city we never want to return to, but always do
  • Chief Adviser Muhammad Yunus leaves for a four-day visit to the United Kingdom from the Dhaka airport on 9 June 2025. Photo: CA Press Wing
    CA Yunus leaves for UK; discussion expected on renewable energy investment, laundered money
  • Inside the aid ship stormed by Israeli forces on 9 June 2025. Photo: BBC
    Israeli forces stormed aid boat carrying Greta Thunberg bound for Gaza: Freedom Flotilla Coalition
  • Enhanced surveillance at Ctg airport amid rising global Covid-19 cases
    Enhanced surveillance at Ctg airport amid rising global Covid-19 cases

Related News

  • America’s cold shoulder to foreign students is worrying Asia
  • How Asia can revolutionise food systems before it’s too late
  • Asia is contemplating a growing nuclear future
  • Buet, Daffodil top among Bangladeshi universities in THE Asia Rankings
  • Bangladesh pivots to Asia, seeks stronger trade ties amid global shifts

Features

File photo of Eid holidaymakers returning to the capital from their country homes/Rajib Dhar

Dhaka: The city we never want to return to, but always do

1d | Features
Photo collage shows political posters in Bagerhat. Photos: Jannatul Naym Pieal

From Sheikh Dynasty to sibling rivalry: Bagerhat signals a turning tide in local politics

3d | Bangladesh
Illustration: TBS

Unbearable weight of the white coat: The mental health crisis in our medical colleges

5d | Panorama
(From left) Sadia Haque, Sylvana Quader Sinha and Tasfia Tasbin. Sketch: TBS

Meet the women driving Bangladesh’s startup revolution

6d | Panorama

More Videos from TBS

What's the problem with elections in April? What BNP says

What's the problem with elections in April? What BNP says

6m | TBS Today
Tarique to meet CA Yunus in London on Friday, confirms Fakhrul

Tarique to meet CA Yunus in London on Friday, confirms Fakhrul

46m | TBS Today
Israel has taken the aid ship 'Madeleine' to its port

Israel has taken the aid ship 'Madeleine' to its port

2h | TBS World
Dr. Yunus and Tarique Rahman's meeting will not solve all problems: Mirza Fakhrul

Dr. Yunus and Tarique Rahman's meeting will not solve all problems: Mirza Fakhrul

1h | TBS Today
EMAIL US
contact@tbsnews.net
FOLLOW US
WHATSAPP
+880 1847416158
The Business Standard
  • About Us
  • Contact us
  • Sitemap
  • Advertisement
  • Privacy Policy
  • Comment Policy
Copyright © 2025
The Business Standard All rights reserved
Technical Partner: RSI Lab

Contact Us

The Business Standard

Main Office -4/A, Eskaton Garden, Dhaka- 1000

Phone: +8801847 416158 - 59

Send Opinion articles to - oped.tbs@gmail.com

For advertisement- sales@tbsnews.net