Govt moves to slash interest rate by 1.0pc
Syful Islam | Friday, 10 June 2016
Against the backdrop of poor response from small investors to get loan under the capital market refinancing scheme, the government has taken a move to reduce the interest rate by 1.0 per cent, officials said.
At present, the interest rate is 9.0 per cent which small investors find high in comparison with the interest rate of available loans in the market, they said.
As a result, some Tk 2.281 billion out of Tk 9.0 billion 'stock market affected small-investors assistance fund' remained undisbursed.
Executive Director of Bangladesh Securities and Exchange Commission (BSEC) Saifur Rahman in a recent letter to the Ministry of Finance (MoF) expressed doubt about disbursement of the remaining fund unless the interest rate is reduced.
He also suggested extending the timeframe for obtaining loan under the scheme by one more year, until December 2017, for smooth implementation of the incentive package as the tenure of the scheme is set till December 2016.
A senior MoF official told the FE that the issues of interest cut and tenure extension have to be incorporated in the guidelines of the scheme to this effect. "We are now working on it."
The government formed the Tk 9.0 billion fund in July 2013 aiming to prop up the capital market and mitigate the sufferings of investors who were affected during the 2010-11 stock market debacle.
Later, the Investment Corporation of Bangladesh (ICB) was appointed as manager of the fund. The central bank disbursed Tk 9.0 billion in three instalments from the fund. Until 15 May this year, merchant banks and stockbrokers have disbursed Tk 6.42 billion among the affected investors.
Besides, disbursement of some Tk 297.20 million of loans in favour of 751 small investors is underway, according to BSEC officials.
The fund has already realised Tk 3.769 billion as principal and interest of loans from the borrowers.
"Many affected-investors don't contact their lenders such as merchant banks and brokerage firms. That's why a portion of the funds is yet to be disbursed," Mr Rahman told the FE earlier.
Before disbursing the funds, the BSEC identified some 954,000 investors as per the guidelines set for the capital market refinancing scheme who are eligible to avail of the facility.
Affected-investors who invested up to Tk 1.0 million during the period between January 2009 and November 2011 were made eligible to get loan under the scheme.
In late August, 2013 the state-run ICB received Tk 3.0 billion as first instalment of the refinancing scheme from the central bank. Later, the rest of Tk 6.0 billion was disbursed by two more instalments.