New Margin Loan Ratio
BMBA seeks clarification
Bangladesh Merchant Bankers Association has requested the Bangladesh Securities and Exchange Commission to clarify the newly-imposed margin loan ratio implementation process. BMBA president Tanjil Chowdhury made the request in a letter sent to the BSEC chairman, M Khairul Hossain, on Sunday. The letter enquired whether the newly-imposed margin loan 1:0.50 ratio would be applicable for the loans to be taken by new clients or for all the loans taken by the existing clients.
The letter also said, ‘If all the existing clients come under the BSEC’s newly-imposed ratio, merchant bankers will need to go for forced sales in many accounts to reduce the margin loan exposure within the limit even if the equity debt ratio is above 30 per cent.’
As per BSEC-set margin loan guidelines, from July 1 this year the margin loan ratio came down to 1:0.50.
The capital market regulator in September 2012 formulated the margin loan guidelines for the brokerage firms and merchant banks in a bid to reduce investors much dependency on loan-based investment.
The margin loan ratio was 1:2 in 2012, while it came down to 1:1.50 on December 31, 2013 as per the BSEC-set guidelines.
The margin loan ratio declined further to 1:1 from January 2014.
The BSEC formulated the guidelines as per the Asian Development Bank’s condition under the capital market development project.
-With New Age input
