Tk60,000cr rescue fund lifts dormant stocks, but dividend clampdown chills bank shares

The central bank upended the Dhaka Stock Exchange yesterday (24 May) with two simultaneous moves, a landmark Tk60,000 crore stimulus to revive shuttered factories and a sweeping curb on bank dividends, producing sharply divergent reactions across the market.

While investors rushed into long-dormant industrial stocks in hopes of a government-backed lifeline, they quietly retreated from bank shares, where a new capital threshold effectively left only two lenders free to pay meaningful cash dividends.

Governor Md Mostaqur Rahman on Saturday unveiled what he called a "production and employment revival" programme, a fund designed to reopen non-operational factories, revive stalled exports and generate roughly 25 lakh jobs for unemployed youth. Eligible companies can borrow at rates as low as 4%.

The Dhaka bourse responded swiftly. Of 32 companies identified as closed or non-performing, 20, or about 63% of the segment, saw their share prices rise yesterday.

Generation Next led the rally with a 6.66% gain, followed by RSRM Steel at 6.49% and Rahima Food at 6.11%. Apollo Ispat, Regent Textile and GBB Power all recorded gains of around 6%. Even heavily distressed names such as Emerald Oil, Usmania Glass and Familytex drew fresh buyer interest.

Bangladesh Bank's second move on Saturday was more sobering for the financial sector. A new circular bars banks with paid-up capital below Tk2,000 crore from declaring any cash dividend. Those who do qualify are capped at paying 50% of total declared dividends in cash.

In practice, the threshold leaves only two of the 32 banks listed on the DSE – BRAC Bank and National Bank – technically eligible. But NBL, currently under severe financial stress, has no realistic capacity to distribute dividends in the foreseeable future, market participants said. The net result: investors saw little reason to buy or hold bank shares.

As investors lost appetite for bank shares, market turnover fell to Tk779 crore yesterday from Tk902 crore the previous session, a drop of more than 13%, reflecting the broader caution that the dividend circular injected into what might otherwise have been a straightforwardly bullish day for the market.

The enthusiasm in industrial stocks belies a deeper uncertainty. Analysts note that many of the 32 shuttered firms closed precisely because of poor governance, unmanageable debt and disrupted production, the same vulnerabilities a stimulus loan alone cannot fix.

Akramul Alam, head of research at Royal Capital, said the rescue fund is a highly positive initiative for the broader business sector, but ensuring good governance will be the key challenge.

He warned that without strict monitoring and transparency, the fund risks being misused or falling victim to the same irregularities that forced many of these companies to shut down in the first place.

Saiful Islam, president of the DSE Brokers Association, told The Business Standard that the government's announcement has already created a positive impact on the shares of closed companies, with the prices of several stocks rising in the market.

He described the decision as a positive development for the capital market. However, he added that several key details remain unclear, particularly how much allocation will go to each sector and which sectors will receive priority under the proposed rescue fund. He also said it is still unclear who will qualify for the loans and through what process they will be distributed.

Structural fragility

Several long-shut companies continued to reflect deep structural weaknesses in the industrial segment.

Aramit Cement Ltd has remained shut since May 2022 due to its inability to open letters of credit (LCs) for importing raw materials.

The company has been incurring continuous losses and has failed to pay dividends for several years.

After the death of founder Akhtaruzzaman Chowdhury Babu in 2012, his son Saifuzzaman Chowdhury Javed, a former land minister, took over the family business. He later stepped down from executive roles after becoming the minister, while his wife, Rukhmila Zaman, served as managing director.

Allegations have been raised over irregular borrowing and abuse of influence during his ministerial tenure.

Apollo Ispat Complex Ltd has been facing severe financial distress, with production remaining completely halted since mid-2021.

As of 2024, the company remained non-operational for more than two years. It is burdened with over Tk900 crore in debt and is currently categorised as a "Z" category stock after failing to provide dividends to shareholders.

RSRM Steel has remained shut since December 2020 and is still non-operational as of May 2026.

The shutdown was mainly caused by working capital shortages, unpaid electricity bills and raw material constraints. The company is also burdened with around Tk2,500 crore in bank loans.

Regent Textile Mills Ltd, a concern of the Chattogram-based Habib Group, has remained distressed and non-operational since July 2022.