Merchant bankers seek budgetary support

The merchant bankers have sought a set of budgetary supports including the fulfillment of pending demands to overcome the ‘nagging situation’ prevailing since the 2010-11 stock market debacle.
At a press briefing held Tuesday, the leaders of Bangladesh Merchant Bankers Association (BMBA)  mainly made the proposal of incorporating their 3-point demands in the budget of the Fiscal Year (FY) 2014.
They said the government would not lose a large amount of tax revenue if their demands are fulfilled, rather the capital market would be more stabilised riding on the budgetary supports.
Their 3-point proposals include: the reduction of corporate tax rate to 35 per cent from the existing 37.5 per cent, the consideration of the interest of margin loans as allowable expenses and treating the provisioning and write-off loss as tax deductible.    
The BMBA Monday also submitted their proposals to the ministry of finance, the revenue board and the securities regulator.
"We waived 50 per cent interest of the margin loans provided in 2011. But the revenue board is yet to issue any circular to consider the interest as allowable expenses," said Akter Hossain Sannamat, the BMBA vice president.
In this connection, the BMBA President Tanjil Chowdhury said the matter of considering the interest as allowable expenses was placed several times before the securities regulator.
"But unfortunately no result is yet to be observed. The market will witness a positive impact if our pending demand is fulfilled," Mr. Chowdhury said.
Akter Hossain Sannamat said the government has proposed the reduction of corporate tax rate to 35 per cent from the existing 37.5 per cent for non-listed companies.
"The proposal will create discrimination if the merchant banks fail to avail the facility as non-listed companies," Sannamat said.
While answering to a question regarding the merchant bank's due role in ensuring the due diligence of the companies willing to go public, Mr. Sannamat suggested the audit of a issuer company should be conducted by the top auditors.
"The responsibility of the auditing job lies with the auditors. That's why the top 15 auditors, ranked by the central bank, should be employed for the auditing job of the companies willing to go public," said Sannamat.
In this connection, he also raised question whether the Bangladesh Securities and Exchange Commission (BSEC) is always able to work fully independently.
"Sometimes, the regulator fails to maintain its independence due to pressure," Sannamat added.
He has also said sometimes issue managers do not play due role because of their bargaining attitudes to the companies willing to go public.
At Tuesday's press briefing, among others, the chief executive officer of the Prime Bank Investment Sheikh Mortuza Ahmed and the managing director of the IDLC Investments Md. Moniruzzaman were present.