Former DCCI president slams regulators over ‘ineffective’ capital market

Bangladesh is "the only country where the capital market has no role in capital raising," former Dhaka Chamber of Commerce and Industry (DCCI) president Rizwan-ur-Rahman has said, criticising both past and present regulators for failing to enforce laws or build investor confidence.

He further warned that no fundamentally strong company would seek listing under the current environment.

Rizwan's views came today (30 September) during the Monthly Macroeconomic Insights (MMI) seminar, jointly organised by the Policy Research Institute of Bangladesh (PRI) and Australia's Department of Foreign Affairs and Trade (DFAT).

Former Bangladesh Bank governor Mohammad Farashuddin, chief guest at the event, traced part of the problem to a 1992 decision that allowed scheduled banks to provide long-term loans.

He called it a "suicidal" move that stunted capital market growth, stressing that development would remain elusive until this dependency was reduced.

Farashuddin added that while the role of bank directors is to shape policy, in Bangladesh they remain directly involved in loan approval. "We must separate bank ownership from management," he urged.

Data highlights the extent of the weakness.

According to the Bangladesh Merchant Bankers Association, the stock market contributes less than 1% of business capital.

Over the last 16 years, some 150 IPOs raised only Tk11,614 crore – barely matching BRAC Bank's annual loan growth of Tk10,000 crore. Market capitalisation has meanwhile shrunk to 7.2% of GDP, down from nearly 40% in 2010, even as Sri Lanka reached 22% and India's market surpassed the size of its economy.

However, efforts are underway to reverse the decline.

A BSEC task force in April recommended direct listings for multinationals and large firms with turnovers above Tk1,000 crore, and mandatory listings for corporations with loans exceeding the same threshold.