Tough provisions halt fund disbursement

Mohammad Mufazzal | Published: March 25, 2014 00:00:00 | Updated: November 30, 2024 06:01:00

Fund worth Tk 3.0 billion under the capital market re-financing scheme remains cent per cent undisbursed, mainly because of tough conditions set for borrowers, even after eight months of its release.
The Bangladesh Bank (BB) released Tk 3.0 billion out of the Tk 9.0 billion capital market re-financing fund by July 2013 with an interest of 9.0 per cent.
Some merchant banks and brokerage firms by this time applied for the fund. But the Investment Corporation of Bangladesh (ICB) was not able to disburse it, as the borrowers failed to give personal guarantee.
Officials of the Bangladesh Securities and Exchange Commission (BSEC) said sanction letters were issued against some borrowers. But eventually the fund could not be disbursed due to the borrowers' 'failure' in providing personal guarantee.
Â "The securities regulator has moved to suggest the government to relax some tough conditions, set for getting fund under the scheme, especially the one regarding giving personal guarantee from the merchant banks and brokerage firms," BSEC executive director and spokesperson Mohammad Saifur Rahman told the FE.
He said the securities regulator will submit its formal proposal to the Ministry of Finance (MoF) soon on relaxing the conditions, so that the fund can be disbursed. Â
Â "So far we have worked hard to release the fund. It will be a pleasure for us if the fund, after disbursement, can ease woes of the investors, affected during the stock market debacle," he added.
Earlier, the Bangladesh Merchant Bankers Association (BMBA) formally proposed the securities regulator to relax the tough conditions, set for availing fund under the re-financing scheme. Â
BSEC Chairman Professor M Khairul Hossain announced a special scheme on compensating the small investors on November 23, 2011 while unveiling a 21-point market stabilisation package at a press briefing at the BSEC office.
The government's much-talked-about 'bail-out' package came following a series of demonstrations by small investors, affected during the 2010-11 stock market debacle.
On August 20, 2013, the MoF approved guidelines of the re-financing scheme, paving the way for disbursing Tk 9.0 billion in three equal instalments with an interest of maximum 9.0 per cent.
The conditions to avail fund under the 'stimulus' package included submission of CIB report, corporate guarantee, and personal guarantee of directors of the borrowing agencies.
A managing director of a leading merchant bank Monday said it is known to all that boards of the merchant banks and brokerage firms also include, among others, independent directors.
"Our independent directors have questioned why they will give personal guarantee for loans under the capital market re-financing scheme," he concluded.