Brokers association urges central bank to include bond defaulter data in CIB

The DSE Brokers Association of Bangladesh (DBA) has formally requested Bangladesh Bank to include bond defaulters' information in its Credit Information Bureau (CIB) database.

The association highlighted that no regulatory body currently maintains a formal record of bond defaults, creating a significant information gap that exposes investors to financial risks and fosters a culture of non-repayment within the fixed-income market.

The proposal was placed during a high-level meeting between a DBA delegation, led by its President Saiful Islam, and the Bangladesh Bank Governor yesterday. Discussions focused on the capital market's current state, challenges within the banking sector, and long-term reforms needed to restore investor confidence.

Saiful Islam pointed out that while bank loan defaulters are strictly monitored through the CIB, bond issuers who fail to honour repayment obligations often escape such scrutiny. Integrating this data into the CIB, the DBA argued, would boost transparency and accountability across the financial sector, curbing corporate issuers' tendency to default on debt securities.

Beyond bond defaults, the DBA submitted a comprehensive set of policy recommendations aimed at building a more resilient financial ecosystem. A key concern was the repeated recapitalisation of troubled banks using taxpayer money, which the association argued is fiscally unsustainable. It instead recommended restructuring distressed lenders through market-based investment, mergers, and private sector participation.

The brokers also emphasised the need to reduce the banking sector's over-reliance on large corporate borrowers. The DBA suggested that big corporate houses should be mandated to raise a portion of their capital through the stock market via bonds and equity. This shift would not only deepen the capital market but also diversify the risks currently concentrated within the banking system.

To improve market liquidity, the DBA proposed expanding access for general investors and non-primary dealer banks to government securities through non-competitive bids. It also called for a shift from the current T+2 share settlement cycle to T+1, arguing that faster settlement would reduce transaction risks, accelerate fund reinvestment, and align the Dhaka bourse with international standards. T+1 settlement or Transaction plus one day means that when you buy or sell a security (such as a stock or bond), the trade is finalized—meaning the buyer gets the asset and the seller gets the cash—exactly one business day after the trade is executed

On fiscal matters, the association noted that existing tax laws impose an added burden on retained earnings and stock dividends, discouraging banks and financial institutions from strengthening their capital bases. It urged greater coordination between Bangladesh Bank and the National Board of Revenue to address these inconsistencies.

Other proposals included launching an integrated local digital payment system to reduce dependency on international gateways and lower transaction costs, and raising the investment ceiling for banks in open-end mutual funds to boost institutional participation.