ADB fund to further develop capital market infrastructure

The Asian Development Bank (ADB) has come up with its funding support under a fresh project to be launched for further infrastructure development of the country's capital markets, officials said.
The Bank has already placed its proposal for the initiative titled 'Capital Market Development Project-III (CMDP-III)' to the government in a bid to provide budgetary support, they said.  
According to officials of the Bangladesh Securities and Exchange Commission (BSEC), the CMDP-III will include the development of legal and regulatory structure, successful financial policy and bond and derivative markets.
"We have received the proposal from the ADB to initiate the CMDP-III. And now we are working to prepare the project framework," said BSEC Executive Director Mohammad Saifur Rahman.
According to Mr. Rahman, the fresh fund proposal has come from the ADB following satisfactory development of the previous two projects -- CMDP-I and CMDP-II -- initiated to bring structural changes in the capital market.
"As the government's development partner, the ADB has made the latest proposal to initiate the CMDP-III through a discussion," he said.
He said a survey will have to be conducted under the Project Preparatory Technical Assistance (PPTA) to address issues which will have to be brought under the purview of the CMDP-III.
"The fund will be sought from the lender under the CMDP-III after getting approval to the project framework in an inter-ministerial meeting," Mr Rahman said.
By this time, the government has completed the CMDP-I and received first installment of US$150 million of the US$300 million fund under the CMDP-II by fulfilling majority conditions through the infrastructure development of the capital market.
Recently, the ADB expressed its satisfaction over the progress made so far in capital market development and agreed to release the rest amount of US$150 million under the CMDP-II.
The conditions which have been fulfilled under the CMDP-II are: submission of the demutualisation bill to parliament, exemption of taxes from the share premium and transaction of bonds, amendment to the Stamp Act 1899 and issuance of circular on efficient price discovery mechanism in auctioning of government securities.
The other two conditions, among others, fulfilled by the borrower's agencies are amendment to the mutual fund's rule allowing asset management companies to reduce their exposure to equity securities below 75 per cent and tax exemption in investment in private sector open-end mutual funds like the advantage enjoyed in open-end mutual funds managed by the Investment Corporation of Bangladesh (ICB).
"Initially, we are working to review the proposed areas of the capital market to prepare the project framework for the CMDP-III," Mr Rahman said.
He said after finalising the project framework, the ADB may set some conditions against its fund, which is yet to be fixed, to complete the CMDP-III.
"The ADB will provide fund for the budgetary support under the CMDP-III. And the government will fund the infrastructure development of the capital market," Mr Rahman added.