The finance ministry has asked the Bangladesh Bank to provide the merchant banks and brokerage houses with Tk 1,266 crore to reschedule the loans of the investors affected in the 2010 stock market crash.
The decision came after a Bangladesh Securities and Exchange Commission proposal had requested the government to approve the refinance scheme.The finance minister in a letter to the BB on Sunday said the merchant banks and the brokerage firms would need a refinancing of Tk 1,266 crore that would help them reschedule the loans of their clients.
In a separate letter, the ministry asked the National Board of Revenue to consider the Tk 115.06 crore as tax free allowable expense for the merchant banks and brokerage firms that they would spend for waiving interest.
The BSEC last month sent a proposal to the finance ministry to allocate the money as loans to the stock market operators along with a report on the implementation status of the stock market compensation package that the government had announced last year.
According to the report, 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 loan investors.
It said Tk 274.58 crore was adjusted as compensation by five brokerage firms and merchant banks from the aforesaid amount.
‘The major portion of the loans of the merchant banks [which were given to investors] has remained unrealised because of an unexpected market condition. On the other hand, merchant banks are repaying the instalments of loans that were taken from the commercial banks at higher interest rates,’ said the SEC report.
‘If we get the fund from the government we will adjust that money against the BO accounts that are inactive now for the burden of loans. Their portfolio capacity has gone down to such a level that they could not trade as per the loan contracts with the merchant banks and brokers,’ Bangladesh Merchant Bankers’ Association president Mohammad A Hafiz told New Age.
He said the investors would get the money as loans that they would repay as per the condition set by the government.
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 and rescheduling of the loan-interest.
Only 7,413 investors out of the total 9.53 lakh got the compensation, it said.
-With New Age input