ICB struggles under debt, eyes debt-equity swap to ease financial strain

Investment Corporation of Bangladesh (ICB) is facing an uphill battle to sustain operations amid mounting debt, with officials warning that the state-run agency's survival will be difficult without immediate fiscal and policy support from the government.
In an internal assessment, ICB leadership points to a precarious financial position marked by soaring interest burdens, illiquid assets and record losses.
The corporation currently pays an average interest rate of 12 per cent on funds borrowed from banks and other institutions, resulting in annual interest payments of approximately Tk 10 billion -- ten times its annual operating costs of around Tk 1 billion.
At the same time, ICB has been unable to liquidate assets due to the prolonged slump in the equity market.
"It is not possible to repay loans by selling the junk stocks purchased previously by the corporation, as there are virtually no buyers for such stocks," said ICB Chairman Prof Abu Ahmed.
In this situation, he noted, only low-cost government funding and supportive policies could help revive the struggling institution.
ICB Managing Director Niranjan Chandra Debnath echoed similar sentiment. "It will be difficult to overcome this plight unless we can escape the debt cycle through the government's policy and fiscal support," he said.
The financial strain has already taken a heavy toll. In FY'25, ICB posted a record loss of Tk 12.14 billion -- its first-ever -- driven by high loan-loss provisioning, poor equity market performance, and heavy interest expenses.
The trend has worsened in FY'26, with losses reaching Tk 1.54 billion in the first quarter alone, more than double the figure from the same period last year.
Besides, the ICB is facing losses exceeding Tk 12.05 billion, as it has been unable to recover any funds invested in fixed deposit receipts (FDRs) with 12 troubled financial institutions.
Of these, 10 are non-bank financial institutions (NBFIs), while the remaining two are private banks.
Most of the NBFIs have already been placed under liquidation by the central bank, while the two banks are also in financial distress.
The distress at ICB is reverberating through its shareholder institutions. State-owned banks, including Sonali Bank, Janata Bank and Agrani Bank, which have extended significant loans to the ICB, now face increased provisioning requirements due to ICB's repayment delays.
Now, ICB has drafted two key proposals to present to the finance minister, seeking measures to restore financial stability.
One key recommendation involves converting debt owed to state-run entities into equity, a move that could ease pressure on both ICB and its lenders.
ICB officials said the debt-to-equity conversion proposal will be accompanied by a request for fresh low-cost government funds.
According to the ICB managing director, the corporation requires around Tk 130 billion to settle outstanding loans and accrued interest.
"A combination of debt-to-equity conversion and loans would be a viable solution if receiving the full proposed amount for debt and interest is not possible," Mr. Debnath said.
In addition, ICB plans to submit a separate proposal aimed at capital market development, following the Finance Minister's recent call for measures to strengthen the market.
ICB moves to tighten internal controls
The ICB has initiated a series of internal reforms to streamline operations and address past irregularities that contributed to its financial distress.
The corporation had previously injected significant funds into junk stocks in an effort to support the market.
ICB Chairman Prof Abu Ahmed said an internal investigation found that many of these stocks were purchased at inflated prices and retained in the portfolio even after their values rose.
He noted that the previous managements had acquired such stocks under pressure and requests from influential quarters.
Disciplinary actions have since been taken against several officials involved in purchasing shares from market manipulators at elevated prices, he added.
"Such corruption occurred through block trades executed via negotiations between buyers and sellers. Dishonest investors previously met ICB officials with ill motives," Prof Ahmed said.
As part of corrective measures, the current board has banned block trades and tightened investment criteria. The ICB will now only invest in 'A' category stocks, with an added emphasis on strong fundamentals.
"Only 'A' category stocks with solid prospects will be considered for inclusion in the portfolio," the chairman said.
Prof Ahmed added that the findings of past mismanagement and irregular practices would be reported to the government as part of efforts to secure fiscal and policy support.
"The ICB will not be able to turn around without funding support from the government," he said.
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