Indiscipline major problem for money market: BSEC chair

Professor Shibli Rubayat-Ul-Islam, chairman of the Bangladesh Securities and Exchange Commission (BSEC), has identified liquidity mismanagement and indiscipline as the biggest problem for the money market now.

"The lenders meet the investment demand by lending for a long-term with the money they collect for a short-term," he said on Sunday, while addressing Inter-University Capital Market Based Real-Time Investment Competition called "NeXTor," organised by the East West University Investment and Finance Club. 

Shibli said since the country's independence, its economy has been predominantly shaped by the money market, but the mismanagement of funds has led to a surge in non-performing loans (NPLs) there. 

As of December last year, NPLs at banks amounted to Tk1,45,633 crore, which was 9% of their total outstanding loans, up from the previous year's 8.16%, according to the latest figures of the Bangladesh Bank. 

Addressing the event, former Bangladesh Bank governor Mohammed Farashuddin, echoed the sentiment of the BSEC chairman. 

He said the banks face challenges in managing funds for long-term investments because of their tendency to gather short-term deposits, sometimes for one day.

According to him, the country's economy consistently grapples with an investment gap to satisfy the demand. 

The economist believes that the capital market has the potential to bridge this divide and can play a pivotal role in long-term investments. 

For this, he suggested establishing a robust capital market first.  

The BSEC chairman highlighted that the country's capital market has evolved beyond equity-based investments to offer diverse options capable of meeting long-term investment needs. 

He said the introduction of a debt board facilitating fund-raising through bonds, and an SME platform supporting small businesses can help a lot to this end. 

He also revealed plans to launch a commodity market through the Chittagong Stock Exchange, aimed at mitigating issues such as over and under-invoicing.

At the event, the East West University Investment and Finance Club recognised three winners in the real-time investment competition, which saw participation from 22 universities. 

Dhaka University emerged as the winner among the competitors, with Bangladesh University of Professionals and North South University secured second and third positions.

Through this competition, the BSEC chairman said, participants gained practical insights into the capital market. 

He said such experiential learning can not be obtained by reading only books.