Merchant banks ‘should be re-capitalised’

Experts said the prospects of mutual fund (MFs) have been 'affected' due to controversial activities executed by some Asset Management Companies (AMCs).
They also stressed the possible ways to restore investors' confidence on the MF industry.
"Investors who have not enough time and knowledge normally rely on AMCs. But the prospects of such industry have been hampered as its past is not praiseworthy," said Md. Shakil Rizvi, former president of Dhaka Stock Exchange (DSE).      
The observations came Monday at a round table discussion titled 'Potentiality of Capital Market in Current Perspective' held at the National Press Club, jointly organised by thereport24.com and Appollo Ispat Complex.
Former advisor to caretaker government AB Mirza Azizul Islam attended the programme as chief gust.
Managing director of Chittagong Stock Exchange (CSE) Wali-ul-Maroof Matin said it's not true that there is limitation in rules to take action against the AMCs which misused the MFs.
"The incidents which occurred in the name of managing MFs are nothing else but the incidents of stealing should be addressed strongly for the sake of MF industry," Mr. Maroof said.
He said there is a tendency in Bangladesh to drive cars following red light and stop following green light.
"Similar tendency is observed while purchasing and selling shares in the capital market," Maroof added.     
Prof. Abu Ahmed, key note speaker of the discussion, said state-owned enterprises (SoEs) did not go public despite an instruction of the Prime Minister.
"The SoEs are being used for the interest of some groups. Bangladesh Biman has become a den of theft. How many airlines are run by government in other countries?" Abu Ahmed said.
In this regard, CSE managing director Mr. Maroof said earlier they tried twice to collect a copy of annual report of Bangladesh Biman following the company's the then announcement to go public.
"But we failed to get any copy of the annual report. It seemed that it was something very confidential," Maroof said.     
Former advisor to caretaker government AB Mirza Azizul Islam said there is lacking in the willingness of politics to bring the SoEs to the capital market.
He said market capitalisation of the country's capital market is lowest among Asian countries.
"Capital market should work along with banks in case of proving funds for companies. Besides, coordination is a must among not only market regulators but also different organisations of the government," Mr. Islam said.
While speaking on investors' awareness Islam said investors must remember that they are investing their own money.
Former DSE president Ahsanul Islam Titu said full potentiality of the capital market still remains unused.
"Existing system of allowing companies to go public is just giving feeds to some quarters. A company should fulfill the listing requirements before getting regulatory consent to offload shars," Titu.
DSE managing director Dr. Swapan Kumar Bala said before the demutualisation the relationship between the regulator and exchanges was like that of master and servant.
"After the demutualisation, the relationship between the regulator and exchanges has become amicable and the market is being operated through mutual cooperation," Bala said.
He said a mandatory provision should be included in the Financial Reporting (FRA) so that companies having good fundamentals go public.
Managing director of IDLC Investments Md. Moniruzzaman said merchant banks should be re-capitalised to overcome their prevailing crisis.
Tauhidul Islam Minto, the editor of thereport24.com, chaired the round table discussion arranged on potentiality of capital market.

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