Downtrend At Stock Market
BMBA defends CIB reporting proposal
Bangladesh Merchant Bankers Association president Tanjil Chowdhury on Wednesday said that the proposals made by the association recently were for better management of the merchant banks and not to hurt investors’ sentiment and the market. Tanjil said the proposal of bringing investors with above Tk 1 crore margin loans under the Credit Information Bureau reporting was nothing new, the same proposal was made by the association on a previous occasion.
He made the remarks at a press conference held in a city hotel before few minutes of the start of trading at the stock exchanges to clarify the BMBA’s position on its proposals submitted to the Bangladesh Securities and Exchange Commission.
The BMBA on November 20 requested the capital market regulator that the investors having loans above Tk 1 crore in merchant banks and brokerage houses should be brought under the reporting of the CIB of Bangladesh Bank to facilitate the recovery of margin loans.
The BMBA letter also sought another year till December 2015 for keeping provisioning at 20 per cent in three-month instalment against the losses the merchant banks and brokerage houses incurred during 2011-2012 after the market crash.
Replying to a question, Tanjil said, ‘We do not believe that the CIB reporting proposal is affecting the capital market. If it is found that the proposal is premature, we will not pursue it further.’
He said, ‘It is just a proposal, so there is no question of implementation. The regulator
will scrutinise our proposals before it takes any decision.’
Replying a question on stakeholders’ criticisms of the proposal of including margin account holders under the CIB reporting, BMBA vice-president Md Moniruzzaman said, ‘There might be differences of opinion among the members, but everyone has to follow a decision that has been taken by the association.’
‘The proposal was made following the recommendation of a committee comprising some big merchant banks,’ he said.
Former BMBA president Mohammad A Hafiz and BMBA secretary general Md Moshiur Rahman were present, among others.
Merchant banks and brokerage house during 2009-2010 had disbursed huge amount of margin loans to their clients without assessing the clients’ capacity.
After the market crash in 2010-2011, huge amount of margin loans remained unrealised amid the regulator’s bar on making forced sales.
The BMBA letter issued on November 20 said, ‘To facilitate the recovery of huge defaulted margin loans, we propose that clients having loan with more than Tk 1 crore should be brought under the CIB reporting, as we do not have any other functional recourses.’
-With New Age input
