Finance minister calls for stock market stabilisation

Finance Minister AHM Mustafa Kamal on Sunday called for the stabilisation of the stock market.

He gave several instructions in this regard to relevant officials during a meeting with Bangladesh Bank Governor Fazle Kabir, while Senior Finance Secretary Abdur Rouf Talukder and Financial Institutions Division (FID) Secretary Sheikh Mohammad Salim Ullah were present.

"The stock market's stability was discussed in the meeting and the minister made several instructions and points to be gradually addressed," Sheikh Mohammad Salim Ullah told The Business Standard in the evening.

The economy has been doing well defying the pandemic fallout and also amid the new challenges stemming from the Russia-Ukraine conflict. Bangladesh economy continues to grow, said Salim Ullah, adding that the minister urged all regulators and parties to help stabilise the country's stock market and facilitate investments.

Following the meeting, the central bank decided to double up the size of the revolving fund for lending to small investors to Tk300 crore alongside extending its tenure that was set to end this year, the FID secretary confirmed.

State-owned Investment Corporation of Bangladesh (ICB) is the operator of the fund and it is going to get the added amount soon.

Asked about the ongoing issues about liquidity within the ICB, Salim Ullah said it "was discussed in the meeting so that such issues cannot add to market volatility".

The Bangladesh Bank's instruction to the Sonali Bank few months ago to reduce its excessive positive balance with the ICB that surpassed single borrower exposure limit by over Tk500 crore, created panic in the stock market as ICB - the de-facto market maker - felt a sudden pressure to sell off stocks in a declining market and pay its lender back.

The ICB, a week ago, wrote to some of its lenders to revolve their funds so that it can continue stock market support.