Merchant bankers have urged the government to allocate a refinancing scheme worth Tk10,000 crore in the upcoming budget for stock investors, who were badly affected by share market scheme in late 2010, at lower interest rate.
“It is now important to allocate the fund in the next budget to infuse confidence among the affected investors and to prop up the market as well,” said Akter H Sannamat, vice-president of Bangladesh Merchant Bankers’ Association (BMBA) at its general meeting held yesterday at a city hotel.
“The central bank can provide the proposed refinancing fund at 5% interest rate to the merchant bankers and then the merchant banks and stockbrokers will disburse the fund to the retail investors at 7% rate.”
Presently, an investor gets margin loan at the interest rate of more than 17%, which is very costly for the retail investors.
The BMBA’s came up with the proposal at a time when a Tk900 crore refinancing scheme got tepid response from the affected stock investors due to tough conditions set by the regulator.
The state-run Investment Corporation of Bangladesh (ICB) received this fund in installment from the central bank at 5% interest rate. Under loan distribution guideline, it will lend to merchant banks and stockbrokers at 7% interest rate. The merchant banks and stockbrokers will then disburse the fund to the retail investors at 9% rate.
BMBA president Tanjil Chowdhury put emphasis on co-ordination among regulators concerned to make any decision that might have any significant impact on the stock market. He also sought permission for opening branches of the merchant banks to make the market vibrant.
About debate over IPO with higher premium, he said: Good companies that deserve premium should be given IPO permission.
The BMBA also put forward budget proposals, including reduction of corporate tax to 25.5% from existing 37.5% and tax exemption on margin loan provisioning.
