BB working with the best proposal to help stock market: Governor 

Bangladesh Bank Governor Fazle Kabir has assured of accepting and implementing the best proposal regarding capital market support and development, among many from the stakeholders. 

Stakeholders are expecting that this may be a positive response to the sought soft loan scheme of Tk 10,000 crore. 

On Tuesday in a meeting at his office with the leaders of the Dhaka Chamber of Commerce and Industries (DCCI), Fazle Kabir discussed many things among the capital market situation. There he assured the business leaders of supporting the capital market too. 

An Executive Director and the BB Spokesperson Md. Serajul Islam told that five issues were discussed at the meeting -- single digit lending rate, classified loan, ease of doing business, the capital market, and the exchange rate. 

"At the discussion, governor has made an assurance. The central bank has received many proposals regarding the capital market. Of those, we are trying to implement the best one," he added.

Central bank officials also told The Business Standard that recently a proposal came from finance ministry to make a policy on how to disburse a soft loan to the stock market intermediaries from fiscal budget.

And they are working on this. 

The Tk10,000 crore fund is sought to be disbursed among the stock dealers, merchant banks and asset managers that might help their purchasing power increased and later stop the ongoing market fall. 

In December capital market intermediaries made a proposal to the finance ministry to make up a fund to provide them as low cost loans for long term.

In response to their proposal finance ministry has asked Bangladesh Bank what should be the policy to disburse this. 

Previously, in the last quarter of 2019, the Bangladesh Bank had invited commercial banks to take a loan against their repo balance for a tenure of six months. 

But only one banks is reported to apply for that as rest of the banks were not confident about successful utilisation of the money within such a short term in spiralling down stock market. 

Bangladesh Bank in the later part of 2010, had suddenly come up with a strong implementation of its regulations for limiting banks' exposure to stocks. The hard lending triggered a crash in stocks. 

Later the central bank changed its policy to allow banks investing at best one-fourth of their risk-weighted assets instead of 10 percent of total deposits. Capital market investment by Banks' subsidiaries is also accounted in the exposure calculation. 

The Central Bank later made up a Tk900 crore refinancing fund and Investment Corporation of Bangladesh disbursed it among affected small investors to help them recover portfolio losses with the additional purchasing power. 

Stock market is in an extreme bad shape. The key benchmarks of the two stock exchanges have fallen one third since January last year.