IIDFC, BRAC seek BB permission to issue bonds worth Tk 9.0b

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Siddique Islam
A financial institution and a non-government organisation (NGO) have sought permission from the central bank to float zero-coupon bonds and asset-backed securities worth Tk 9.0 billion to strengthen their financing capacity.
The Industrial and Infrastructure Development Finance Company Limited (IIDFC), a leading non-banking financial institution (NBFI), has submitted an application to the Bangladesh Bank (BB) seeking permission to issue zero-coupon bonds worth Tk 4.0 billion.
On the other hand, the BRAC, a leading NGO, has also applied to the central bank for floating asset-backed zero-coupon bonds amounting to Tk 5.0 billion.
"We've received two applications from two organisations seeking permissions to float zero-coupon bonds and asset-backed securities," a senior official of BB told the FE Monday.
He also said the central bank is now working on it.
"We'll issue no-objection certificates to the organisations concerned after fulfilment of our requirements," another BB official said, adding that the Securities and Exchange Commission (SEC) would give final approval to the organisations to float such securities after the issuance of certificates by the central bank.
"Corporate entities are now key buyers of such bonds under private placements," the official said, adding that the corporate entities would get income tax exemption on earning from the product.
The central bank has already given permission to the Uttara Finance and Investment Limited for floating zero-coupon bond worth Tk 2.0 billion while the United Leasing Company Limited has already obtained permission from the central bank to issue such bond worth Tk 500 million.
On October 22 last, the central bank governor advised the chief executive officers and managing directors of the NBFIs to introduce new products like zero coupon bond and debenture to increase the flow of fund without depending on banks
"We've filed an application to the central bank seeking permission to issue zero-coupon bond worth Tk 4.0 billion to strengthen our financing capacity," Managing Director of the IIDFC Asaduzzaman Khan told the FE on the day.
Mr. Khan also said the IIDFC wants to boost its activities through issuing such securities.
Currently, there are six zero-coupon bonds and one asset-backed zero-coupon bond, issued by five NBFIs.
The NBFIs are Industrial Promotion and Development Company of Bangladesh Limited (IPDC), IDLC Finance Limited, United Leasing Company Limited, Industrial and Infrastructure Development Finance Company Limited (IIFCL) and Delta Brac Housing Finance Corporation Limited.
Earlier, the central bank introduced guidelines on mortgage-backed securities (MBS) market in Bangladesh aiming to bring dynamism in the country's bond market.
"The overall bond and securitisation market in Bangladesh has not yet flourished significantly. Specially, the concept of 'mortgage-backed securities market' is quite new," the central bank said in its guideline, issued earlier.