Debt-laden ICB appeals for policy lifeline
Staff Reporter :
The state-owned Investment Corporation of Bangladesh (ICB) is facing severe financial distress, crippled by mounting debt and struggling to meet monthly interest payments exceeding Tk 80 crore. In a bid to restore fiscal stability and re-engage in capital market activities, the institution has proposed the creation of a government-supported investment fund.
An ICB delegation submitted the proposal on Thursday, during a meeting with Dr. Anisuzzaman Chowdhury, Special Assistant to the Chief Adviser at the Ministry of Finance. The meeting focused on ICB’s deteriorating financial condition, potential recovery strategies, and broader measures to restore investor confidence in the stock market.
While no final decision was reached, Dr. Chowdhury acknowledged the seriousness of the crisis and committed to a thorough evaluation of the proposal. Further consultations with market stakeholders and investors are expected before a resolution is adopted.
According to ICB officials, the institution’s financial woes stem from policy directives issued under the previous administration, which encouraged ICB to invest borrowed funds in the capital market at high interest rates. Following a market downturn, ICB incurred losses of over Tk 4.5 billion. The situation has been exacerbated by mandatory provisioning requirements, intensifying its liquidity crunch.
ICB currently holds outstanding debts of approximately Tk 10,000 crore, with an average annual interest rate of 12 per cent. Despite having repaid Tk 2,000 crore recently, the monthly debt servicing requirement remains unsustainably high, outstripping the corporation’s income.
To address this crisis, ICB has proposed a sovereign investment fund managed by an independent government-appointed board. While ICB would implement investment decisions, strategic oversight and policy direction would rest with the autonomous board.
The fund is intended to operate counter-cyclically – buying shares during market downturns to provide stability and selling in bullish periods to generate returns.
ICB representatives explained that under the previous administration, the organisation was compelled-under the guidance of the Bangladesh Securities and Exchange Commission (BSEC) and government encouragement-to inject borrowed capital into the stock market at steep interest rates.
ICB Chairman Professor Abu Ahmed expressed optimism that the upcoming national budget would offer targeted incentives. “We’ve proposed a 10 per cent corporate tax differential between listed and unlisted companies,” he told The New Nation. “Additionally, for mutual funds, we’ve recommended allocating 20 per cent of annual profits to reserves, with the remaining 80 per cent to be distributed to unitholders.”
Commenting on the causes of the crisis, Professor Ahmed placed the blame on poor decisions and excessive borrowing under the former administration. “There have been no irregularities under the current government or board,” he said. “We have submitted a comprehensive recovery plan to the Finance Ministry and remain committed to reform and transparency.”
If implemented, the proposed fund could play a crucial role in restoring ICB’s financial health and reviving investor confidence in Bangladesh’s capital markets.