State-owned Investment Corporation of Bangladesh (ICB) wants a special loan of Tk 10,000 crore to end the long stagnation of the country’s capital market, strengthen its institutional capacity and restore the confidence of general investors. ICB has asked the government to approve and disburse the loan for a term of 10 years, including a two-year grace period. ICB managing director Niranjan Chandra Debnath recently sent a letter to Nazma Mobarek, secretary of the Financial Institutions Division, sources concerned said.
Since its founding, the institution has played an important role as a “market maker” in developing the capital market, expanding institutional investment and increasing the flow of capital into the stock market. Recently, however, the market has fallen because of a prolonged slump, a crisis of investor confidence and high interest rates. In addition, repayment of loans taken from banks at high interest in past years and of foreign-currency loans has increased the financial pressure on ICB. With no regular share trading or capital gains at present, its own income is also being badly disrupted.
The proposal sent by ICB says that if the Tk 10,000 crore is obtained it will be used with great caution in various strategic areas. A large part of the fund will be invested directly in the capital market, which will help remove the liquidity crisis and bring back momentum in shares. Repaying earlier high-interest loans will significantly reduce ICB’s financial costs and interest burden. By using the fund in phases, ICB can be turned into a very strong and profitable state institution able to pay the government dividends regularly, the proposal says.
The letter says that after the severe stock market crashes of 1996 and 2010, ICB played a very important role as a “market maker” in rebuilding the market, removing the liquidity crisis and restoring the confidence of general investors. After the 2010 crash in particular, in line with policymakers’ expectations, ICB collected term deposits from various banks and financial institutions at high interest and invested steadily in the capital market to restore stability and ensure the supply of liquidity.
The letter also says that since its founding the government has given ICB a total of Tk 298.26 crore in capital. Against this, up to fiscal year 2024-25 ICB has deposited a total of Tk 1,785.06 crore in the government treasury as dividends and corporate tax: Tk 592.94 crore in dividends and about Tk 1,192.12 crore in corporate tax. This shows that as a state financial institution ICB has been contributing directly and consistently to the economy, the letter says.
The letter says that in trying to keep the capital market stable, the once financially strong ICB has become a rather weak and heavily indebted institution. As a result it has become extremely difficult for it to support the market overall while keeping itself afloat.
To overcome this crisis and to protect the sustainable development and stability of the capital market, a supply of low-cost funds or loans from the government has become urgent, it says. Under the proposal, a special loan of Tk 10,000 crore for 10 years would enable ICB to overcome its financial risk. Tk 7,000 crore would be used to repay high-interest liabilities, saving a large amount in costs. The remaining Tk 3,000 crore would be reinvested in the capital market to earn capital gains and dividend income, turning ICB into a profitable institution again within just two years.
ICB chairman Professor Abu Ahmed said ICB is now carrying large losses after once buying shares at high prices to save the stock market. In addition, many people in the past used ICB for “pump and dump” through irregularities in share trading, he said. As a result the institution is now in a major financial crisis, and it needs a low-interest loan of Tk 10,000 crore to survive.
বাংলায় মূল প্রতিবেদন পড়ুন · Read the original Bengali report