Tk 9.0b disbursed under capital market refinancing scheme

The disbursement of Tk 9.0 billion has finally been completed under the capital market refinancing scheme initiated after 2010-11 stock market debacle to reduce sufferings of 'affected' investors.
In August 2013, the state-run Investment Corporation of Bangladesh (ICB) received Tk 3.0 billion as the first installment of the refinancing scheme from the central bank. Later, the rest of the fund worth Tk 6.0 billion was disbursed through two installments.
After disbursement of first installment, the tenure of the refinancing scheme was extended several times to ensure the utilisation of the fund.
Finally, the fund's disbursement came to an end in December last through repeated efforts of the supervisory committee of the refinancing scheme.
Mohammad Saifur Rahman, an executive director of the Bangladesh Securities and Exchange Commission (BSEC), said the government had provided the fund with a good intension.
"We facilitated the borrowers relaxing the conditions of receiving funds under refinancing scheme. Interest rate was also reduced as our objective was to ensure complete utilisation of the fund," said Rahman, also a BSEC spokesperson.
Asked about the extent of the investors' benefit, Rahman said investors purchased shares before market debacle at high prices taking margin loans.
"Due to continuous price erosion, it's not possible to overcome investors' total loss with the government's funds. But those who received funds somehow were benefited," Rahman said.
He also said 50 per cent interest on margin loans was also blocked while the fund was disbursed against the portfolios of affected investors.
According to report of supervisory committee, 35 merchant banks and brokerage firms have received the fund worth Tk 9.0 billion against the portfolios of 36,481 affected investors.
Of Tk 9.0 billion, above Tk 5.83 billion was disbursed to 18 merchant banks, while 17 brokerage firms received the remaining fund worth Tk 3.16 billion.
Some brokerage firms received funds under refinancing scheme through more than one phase.
ICB Capital Management received Tk 844.80 million in first phase, Tk 741.80 million in second phase, above Tk 1.01 billion in second installment of second phase, according to the report of supervisory committee.
Of other borrowers, BRAC EPL received above Tk 567.60 million, ICB above Tk 566.70 million, NBL Securities above Tk 265.40 million, Janata Capital and Investment above Tk 407.80 million, and Fareast Stocks & Bonds above Tk 187 million.
Asked, an official of a leading merchant bank said many investors were not able to avail the facility by fulfilling relevant conditions.
"But those who availed the facility were benefited. We have also tried to reduce investors' burden waving interest on margin loans," the official said.
He also said many portfolios of affected investors who purchased shares before market debacles at high prices taking margin loans are yet to come out of negative equity.
Initially, merchant banks and brokerage firms disbursed the funds against the portfolios of affected investors at an interest of 9.0 per cent.
Later, the interest rate was reduced following the plea of merchant banks and brokerage firms.
Then the borrowers received funds at an interest of 5.0 per cent and they disbursed the fund against investors' portfolios at an interest of 7.0 per cent.
After complete disbursement of Tk 9.0 billion, the supervisory committee of the refinancing scheme is now conducting the recover job of loans disbursed against the portfolios of affected investors.
According to supervisory committee of the refinancing scheme, above Tk 7.80 billion, including interest, has already been recovered.
Before disbursing the fund, the BSEC identified some 954,000 investors, who are eligible for the loan facility, in line with the guidelines set for the capital market refinancing scheme.
The affected-investors, who invested up to Tk 1.0 million during the period between January 2009 and November 2011, were eligible for the loan under the scheme.

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