Deadline for submission of loan application under the Tk9bn capital market refinance scheme is likely to be extended by one month due to tepid response from small investors.
The deadline expires this month. Since launching of the scheme in late August, a few investors have applied for the loans – out of nearly 1m affected in stock market debacle about three years back.
“We want one more month as response so far remains poor,” said Bangladesh Merchant Bankers Association President MA Hafiz, after a meeting with Bangladesh Securities and Exchange Commission (BSEC) in Dhaka on Wednesday.
“We also demanded relaxing conditions for the loan. The regulator assured us to consider the demand.”
The supervision committee of the scheme earlier set 18 conditions, including clearance from the Credit Information Bureau (CIB) for all sponsor-directors of a merchant bank or a brokerage house and giving 50% waiver interest on the margin loans against the investors’ accounts.
It is difficult to provide CIB clearance for all sponsors-directors within the deadline and the merchant banks and stockbrokers are reluctant to waive interest on margin loans, said a merchant banker.
Under the loan distribution guideline, the state-run Investment Corporation of Bangladesh (ICB), which has already received Tk3bn as first installment of the Tk9bn refinance scheme at 5% interest rate from the central bank, will lend to merchant banks and stockbrokers at 7%.
The merchant banks and stockbrokers will then disburse the fund to the retail investors at 9% interest rate.
Then, the borrowers will have to repay the loans in three-month installments to the loans to ICB that will subsequently deposit the received amount to the refinance fund.
The regulator will have the authority to cancel licences of the merchant banks and stockbrokers if they fail to repay the loans on time, the guideline said.
The affected retail investors, who had investment up to Tk1m from January 2009 to November 2011, are eligible to receive loan from the specialised fund.
The BSEC has identified 954,000 affected small investors to be brought under the facility of refinance scheme.
The government in March 2012 had announced a compensation package that included an interest waiver on margin loans for the investors.
