M bankers, stockbrokers say tough conditions hold them back
Only one stockbroker of the Dhaka Stock Exchange, Greenland Equities Ltd, has applied to the Investment Corporation of Bangladesh for loans under the government’s capital market refinance scheme after two months of invitation for applications because of tough loan approval conditions. The ICB in September 3 formed a six-member loan approval committee as per the government’s guideline for the disbursement of the refinance fund of Tk 900 crore through merchant banks and brokerage houses to the small-scale investors affected by the stock market crash in 2010-2011.
For sanctioning of a loan under the scheme the committee set total 18 conditions including clearance from Credit Information Bureau for all sponsor-directors of a merchant bank or a brokerage house.
As per the guideline, merchant banks and brokerage houses have to apply for the refinance loans against the affected small-scale investors’ accounts.
Senior officials of merchant banks and brokerage houses said tough conditions coupled with a lot of document requirements had made it almost impossible for them to apply for loans under the scheme.
It is difficult to provide CIB clearance for all sponsors-directors within the November 30 deadline, they said.
A senior merchant bank official said that their board of directors had decided not to apply for the refinance loans on behalf of their affected small-scale investors as it would be difficult to fulfil the requirements.
‘So far as I know, only one stockbroker has filed an application with the ICB for the refinance loans for their small-scale clients affected by the market crash,’ Bangladesh Securities and Exchange Commission executive director Saifur Rahman told New Age last week.
Saifur, also the head of the supervision committee of the government’s refinance scheme, said that they were ready on their part and hopeful of receiving more application from merchant banks and brokerage houses by the deadline.
Bangladesh Merchant Bankers Association president Mohammad A Hafiz told New Age recently that filing of applications for the refinance loans by merchant banks and brokerage houses would take some time as they would have to fulfil some requirements.
‘As far as I know, two merchant banks have already prepared to apply for the loan,’ he said.
Merchant bankers and stockbrokers said waver of 50 per cent interest on the margin loans of the affected small-scale investors was another condition for getting refinance loans against the investors’ accounts, but a few of the organisations had so far waived the interest.
As per the BSEC report sent to the finance ministry in April this year, only 7,413 small-scale investors out of the 9,53,849 affected by the 2010-2011 stock market crash got interest waiver under the government-announced compensation package.
The BSEC’s letter also sought government fund to implement the scheme. The government approved the fund in August.
The Bangladesh Bank on August 26 released Tk 300 crore as the first phase of the Tk 900-crore refinance scheme.
-With New Age input
