The Investment Corporation of Bangladesh (ICB) has sought assistance of the Financial Institution Division (FID) of the Ministry of Finance to help meet its liquidity shortage.
The Corporation has sought FID intervention to ensure investments by different state entities in its term deposit scheme. Funds, thus received, will help keep the country's bourses vibrant and stable, officials claimed.
The ICB, according to sources, is facing shortage of liquidity necessary to keep its investment operations unhindered. Withdrawal of investments in deposit schemes by banks to meet the single borrower exposure limit is responsible for the liquidity shortage, they added.
Recently, the ICB has requested the FID to initiate necessary steps and ask the ministries, divisions and state entities to invest in the former's term deposit scheme.
Since the 2010 stock market debacle, the ICB has been trying to reduce financial losses of small investors. It has invested a significant amount of funds in the capital market to help keep it stable, active and sustainable, according to the ICB letter.
In November 2017, the Bangladesh Bank (BB) instructed the banks to withdraw their additional funds from the term deposit scheme to meet the single borrower exposure limit, according a central bank's circular.
After getting the instructions, some 7/8 banks decided to withdraw their investments from the scheme. This has put the ICB in liquidity crisis.
The ICB in its letter has expressed the fear that a volatile situation may be created in the market if it sells any large volume of securities to make payments against banks' term deposits.
The ICB has also sent a list to the FID containing the names of different ministries including 69 state agencies as potential sources of fund.
The FID had issued instructions to the ministries, divisions and state entities to invest their funds in the ICB deposit scheme in 2011.
The ICB itself also requested different agencies to make investments in its scheme, a senior official of the ICB said.
"We have received a letter from the ICB in connection with deposit scheme. But we are yet to start work on the issue," a high official of FID told the FE on Thursday.
"I have heard that ICB needs more investments. They are yet to submit any proposal to the board of ICB in this connection," Prof Dr Mojib Uddin Ahmed, Chairman of the Board of Directors of ICB, told the FE.
Despite repeated attempts over phone, Managing Director of ICB Kazi Sanaul Hoq could not be reached for his comments in this regard.
The government formed a Tk 9.0-billion fund in July 2013 to prop up the capital market and mitigate the sufferings of investors who were affected during the 2010-11 stock market crash.
Later, ICB was appointed as fund manager.
Currently, ICB receives term deposits from individuals/institutions offering attractive and negotiable interest rate which helps mobilise savings for profitable investment in securities. It has invested over Tk 369 billion in the secondary market.
ICB is one of the largest investors in the share market of Bangladesh.
Investing in the share market, providing loans and advances, acting as manager/trustee/custodian of mutual funds are some of main activities of ICB.
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