ADB happy over capital market development, to release $150m

The Asian Development Bank (ADB) has expressed its satisfaction over the progress made so far in capital market development and agreed to release US$150 million fund further for the same, sources said.
The fund is the second tranche of the $300 million Capital Market Development Programme-2 (CMDP-2) under which various reforms are under process.
An ADB mission visited Bangladesh from January 20 to January 22 to see the progress made under the CDMP-2 and expressed its satisfaction in an aide memoire forwarded to the government on January 29.
"The mission is of the view that the government and all relevant stakeholders remain very committed to timely implementation of the CDMP-2. Indeed, the government has indicated its intent on fully satisfying second tranche policy actions by the first quarter of 2014," the ADB said in the aide memoire.
The mission, however, expected that the government (GoB) will fulfill the remaining policy actions.
The ADB sought confirmation of the aid memoire by the GoB by February 12, 2014 for further actions.     
Of the $300 million under the CMDP-2, the ADB released $150 million as budgetary assistance after fulfilling 13 conditions out of 28 it imposed for the fund.
For releasing the second tranche of the fund, 15 conditions need to be met by March this year. The GoB so far complied with 11 conditions out of 15, sources at the Ministry of Finance (MoF) said.
In July last, the government passed the amended Bank Companies Act (BCA) to contain risks posed by equity markets through consolidated supervision.  The Securities and Exchange Commission (SEC) has completed review of the capital requirements for intermediaries through a risk-based supervision approach.
As part of fulfilling the conditions, a manual for usage of the surveillance system and report generation was prepared in October last year. A capital market tribunal was established in the first week of January. The Demutualisation Act was passed in the parliament in April last year and income tax ordinance was amended for exemption of 3.0 per cent tax on initial public offerings (IPO). The transactions tax law on bonds and Stamp Act were amended and asset management companies were allowed to reduce their exposure to equity securities.
However, the GoB is yet to fulfill conditions on issuance of guidelines by the central bank on banks' equity risk exposure limit and passage of Financial Reporting Act 2013. Other terms are staffing of the office of the chief accountant and adoption of guidelines for accountants, and auditors  and formulation of a white paper for strengthening the insurance sector.