The securities regulator formed a panel on Sunday to work out a guideline on disbursing refinancing scheme fund among small investors affected by stock market debacle in December 2010.
A five-member panel, headed by Arif Khan, a member of the Bangladesh Securities and Exchange Commission (BSEC), has been formed to disburse the first installment of fund for the merchant banks of the stock market amounting to Tk3bn.
The move came in line with the finance ministry’s recommendation. The central bank on behalf of the government will transfer the fund to the account of state-run Investment Corporation of Bangladesh (ICB).
After making a guideline, the fund will be released by the central bank, sources said.
The Bangladesh Bank (BB) is supposed to release first installment of refinancing scheme fund for lenders of the stock market on Sunday to prop up the stock market. But the decision to formulate guideline on refinancing scheme fund disbursement will delay to compensate investors.
As soon as possible, the guideline will be made, an official said. The BSEC and the ICB will implement the scheme in three phases after formulation of the guideline.
The central bank earlier proposed to the government to use BB’s Tk 9bn profit as refinancing scheme for stock brokers to revamp the capital market. In the new budget the government kept Tk50bn for propping up the ailing stock market.
Ex-finance adviser Mirza Azizul Islam said it is positive move for the market as this incentive might boost investors’ sentiment.
According to the proposal, the government will charge interest on the fund at 5% to the ICB. The state-owned investment company will disburse the fund to merchant banks at 6% interest rate. The investors will have to pay 10% rate for refinancing scheme.
The stock brokers have been asked to waive 50% interest on merchant loan and other block loans at 10% interest under the stimulus package that was announced after the debacle in stock market in December (2010)-January (2011).
On November 27, a committee, headed by Faykuzzaman, defined that adversely affected small investors are those who deposited Tk1m or less of own money in beneficiary owners (BO) accounts, and incurred losses.
It found that the number of adversely affected small BO accounts is 152m. The amount of total interest on loans in such accounts is Tk4.99bn. The total number of adversely affected BO accounts is 178m, and the total amount of loss suffered by those accounts is Tk 223bn.
