Experts push capital market growth to curb loan dependence

Staff reporter :

Finance Adviser Salehuddin Ahmed has stressed that Bangladesh must urgently shift its financing strategy toward mobilizing resources from the capital market rather than depending excessively on loans and taxes.

He cautioned that persistent over-reliance on borrowing has already contributed to the country’s growing default culture, undermining both financial stability and investor confidence.

Speaking at a seminar titled “Unlocking Bangladesh’s Bond and Sukuk Markets: Fiscal Space, Infrastructure Delivery and Islamic Money Market Development”—jointly organised by the Bangladesh Securities and Exchange Commission (BSEC) and the Dhaka Stock Exchange (DSE) at DSE Tower on Sunday.

Salehuddin emphasised that private sector participation in the bond market remains disappointingly low.

“To meet our financial needs, we must look to the capital market rather than relying only on loans and taxes,” he said. The adviser noted that the capital market should not be treated merely as a platform for short-term speculation. Instead, he called for cultivating financial literacy and fostering a long-term investment culture.

On Islamic finance tools, he underlined that sukuk should always be linked to tangible, viable assets, rather than fragile financial derivatives that expose investors to excessive risk.
Special Assistant to the Chief Adviser Anisuzzaman Chowdhury offered a more critical reflection, arguing that Bangladesh’s institutional and financial practices have been deteriorating for decades.

“Our DNA has been corrupted. This erosion did not occur in just the past 15 years—it has been growing year after year,” he said.
He warned that regulatory weaknesses and repeated policy mistakes have prevented the country from effectively retaining funds within its economy.

Salehuddin also flagged concerns over pension fund management, cautioning that since these are public funds under government custody, reckless investment without careful liquidity planning could leave the state unable to meet its future obligations.

Bangladesh Bank Governor Ahsan H. Mansur added that a joint task force of the central bank and BSEC is already working to strengthen the country’s bond market, presenting concrete policy recommendations to the government.

He noted that globally, the bond market is worth around $130 trillion—making it the single largest financial market. “Banks can lend for five to six years, but rarely beyond 10.

For financing long-term infrastructure or industrial projects, bonds are essential. Even savings certificates should be made tradable in the secondary market,” he argued.

Mansur also advocated for pension system reforms, stressing that sustainability will only be ensured through long-term investment strategies supported by an efficient bond market.