The dispute over operational authority of the country's oldest and largest-ever pooled fund remains unresolved, with the asset manager aiming to retain control and the market watchdog seeking to
assume it.
The ICB Unit Fund, floated in 1981 and managed by the Investment Corporation of Bangladesh (ICB), operates under the ICB's own ordinance.
The Bangladesh Securities and Exchange Commission (BSEC) has, on several occasions, instructed the ICB to register the fund under securities rules.
However, the ICB has enjoyed backing from the finance ministry in retaining control over the fund. In an order issued in 2017, the ministry asked the securities regulator to waive the Unit Fund from registration requirements.
The rift over the controlling authority resurfaced after the BSEC again issued a letter to the ICB on March 3, directing it to register the fund within 45 days, following a report published by The FE on financial mismatches arising from the fund's operations.
The Unit Fund's registration would strip the ICB of a significant source of management fee income at a time when its expenses far exceed its earnings. Concerned, the corporation wrote to the ministry on April 9 to help continue with the waiver.
Md. Abul Kalam, spokesperson of the securities regulator, said the Unit Fund had been launched when no regulatory body existed for the capital market.
"Like the Unit Fund, many instruments were initiated in the money and capital markets, but later they gradually came under the regulatory framework." The BSEC wants to bring the pooled fund under its regulations to ensure accountability in asset management and timely disclosures.
Mr Kalam also pointed out allegations that unitholders did not get their money back in time after surrendering their holdings. Without registration, the regulator cannot be aware of the fund's operational status or intervene.
On condition of anonymity, a senior official of the ICB spoke of the organisation's arguments in favour of the fund being managed by it.
He said any mutual fund has a sponsor, a trustee, an asset management company and a custodian working for it.
As per the revised public issue rules that came into effect at the end of last year, no single entity can play more than one role.
Moreover, to avoid conflicts of interest, any subsidiary of the ICB or its holding company will also not be able to take on a role.
Therefore, after the registration of the Unit Fund, three other roles would have to be split among companies other than the state-run ICB.
Many private companies would vie to grab responsibilities to earn a handsome amount supervising the fund of more than Tk 40 billion.
"ICB will be deprived of its income. On the other hand, the operational cost of the fund would increase due to fees paid to multiple parties.
"It may hurt returns of the unitholders. Many of them may start liquidation, causing selling pressure in the market," the official added.
In its letter sent to the ministry, the ICB said any sudden change or transfer of the fund can hamper the interests of the unitholders and can reduce dividend amounts following a rise in management costs.
As an unregistered fund, the annual cost of the fund's management is around Tk 412 million, which
may rise to Tk 783 million because of annual fees for registration and other entities such as custodians and trustees, according to the letter.
The primary objective of the ICB Unit Fund was to mobilise savings from small investors through the sale of units and to invest in marketable securities.
Most unitholders are public and private sector employees. Registered fund owners also include retired employees, housewives, non-resident Bangladeshis and institutional provident funds.
Meanwhile, the fund's auditor has flagged several inconsistencies in its management.
For example, the fund incurred an unrealised loss of Tk 14.27 billion from marketable investments in FY25, but the loss was not recognised in its profit and loss statement. Instead, it was shown under other comprehensive income.
In the financial statements, the fund also failed to consider the fair value of an investment made in non-listed securities. The cost value and market value of the investment were Tk 2.58 billion and Tk 1.50 billion, respectively.
Also, the Unit Fund's bank account opened for undistributed dividends was supposed to have a balance of Tk 466 million in FY25. However, the auditor found a shortfall of Tk 201 million.
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