Move to extend IPO quota for debacle-hit investors

A move is underway to extend the quota facility in the initial public offerings (IPOs) for the small investors, who were affected by the capital market debacle in 2010-11.

Bangladesh Securities and Exchange Commission (BSEC) recently requested the finance ministry to allow continuing with the facility for six months more to June 30 this year.

The government had earlier extended the 20 per cent quota facility for five times as the last one expired on December 31, 2017.

The finance ministry is yet to finalise its decision in this regard, a joint secretary of the Financial Institutions Division said.

Generally, the IPO shares are traded comparatively at higher prices on the secondary market than their issue prices due to unusual attraction of a section of investors to that scrip in first few trading sessions. For this, the quota facility allows the affected inventors to make some profit.

The government on March 4, 2012 declared a special package for the capital market investors, including the 20 per cent quota facility in IPOs for the fiscal year 2012-2013 for the small investors to help them mitigate the losses due to the debacle.

The commission had also declared a stimulus package in the form of short, mid and long-term basis.

The central bank had also disbursed Tk 9.0 billion to Investment Corporation of Bangladesh (ICB) through three equal installments to reduce the sufferings of the affected investors.

Some Tk 2.57 billion is yet to be disbursed against the portfolios of affected investors. The government recently reduced the interest rate on loans to 6.0 per cent from 7.5 per cent under the refinancing scheme.

At least 0.960 million investors were affected by the debacle, according to a BSEC report on the 2010-11 stock market crash.

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