BB to set up Tk 900cr fund for stock market

Bangladesh Bank on Wednesday said that it would set up a refinance fund of Tk 900 crore to compensate small investors hit hard by the capital market crash should the government approves it.
The BB will raise the fund from its profit that the central bank sends to the government every year, BB deputy governor SK Sur Chowdhury said at a press conference at the central bank headquarters in the city.
The plan came in response to a letter sent by the finance ministry to the central bank last month.
The government may give the fund to the investors through the Bangladesh Securities and Exchange Commission if it wishes, Sur said.
‘The BB will not take any responsibility for this fund. We took a decision while formulating the last monetary policy that the central bank would not take any step that would discourage the capital market,’ he said.
As part of the move, the BB has taken the measure in line with its monetary programme, he said.
The inflation will go up as the circulation of broad money will increase in the money market if the BB directly pushes money into the fund, he said.
Sur claimed that the country’s macro-economic sector was now doing fine as the foreign exchange reserve, current account balance and export were now in a positive zone.
Earlier in April, the Bangladesh Securities and Exchange Commission proposed the ministry of finance to provide the markets with Tk 1,266 crore with a view to rescheduling loans of the small-scale investors affected by the stock market crash in 2010.
The BSEC in its proposal said that the merchant bankers would need Tk 913.90 crore while the brokerage houses of Dhaka and Chittagong stock exchanges would need Tk 627 crore for refinancing the margin loans of the small-scale investors.
Following the BSEC request, the finance ministry on May 5 asked the BB to provide the merchant banks and brokerage houses with Tk 1,266 crore to this end.
The government in March 2012 had announced the compensation package that also included an interest waiver on margin loans for the investors who suffered losses during the market crash in 2010.
After the compensation package was announced, merchant banks and brokerage houses informed the BSEC that the total number of affected investors was 9.53 lakh and Tk 230 crore would be needed for waiving interest of the investors.
Only 7,413 investors out of the total 9.53 lakh got the compensation, it said.

-With New Age input

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