Staff reporter :
The government to make the capital market more efficient and ease regulatory burdens to attract investors and encourage companies to go public, helping shift financing away from banks toward market-based sources, experts said.
They also called for policy consistency, faster IPO approvals, and greater oversight of non-listed firms at a discussion jointly organised by The Daily Star and IDLC Investments.
They stressed that improving efficiency, ensuring policy stability, and streamlining public share offerings would help attract investors and encourage more companies to raise funds from the market rather than banks.
Speakers from brokerage houses, listed companies, regulatory bodies, and banks highlighted that bank-based financing has long dominated Bangladesh’s economy, creating systemic risks and limiting long-term investment opportunities.
A shift toward market-based financing, they argued, would broaden access to capital and strengthen financial stability.
Shaheen Iqbal, deputy managing director of BRAC Bank, said many firms are heavily leveraged and need restructuring, yet hesitate to go public due to trust issues.
“If companies can rely on the capital market for transparent, timely fund-raising, more will consider listing,” he said.
Rupali Chowdhury, president of the Bangladesh Association of Publicly Listed Companies, pointed out that lengthy processes and delayed approvals discourage firms.
While bank loans are quicker, she said, capital market procedures often take so long that the original need for funds changes.
She also criticised inconsistent tax policies, saying sudden changes by authorities such as the NBR undermine investor and issuer confidence.
Saiful Islam, president of the DSE Brokers Association, echoed concerns about policy unpredictability and regulatory imbalance. Public companies face strict compliance requirements, he said, but similar scrutiny on unlisted firms would level the playing field and encourage more listings.
Former DBA president Ahmed Rashid Lali argued that long IPO processing timelines-sometimes up to two years-remain a major disincentive.
Responding to such criticism, DSE Chairman Mominul Islam said reviews are necessary due to questionable financial disclosures from some companies.
Stronger enforcement of reporting standards, he added, would allow faster approvals and restore trust. “The system became strict because of bad practices, and good companies are suffering,” he noted.
Bangladesh Bank’s director Istequemal Hussain emphasised that quicker approvals would attract more issuers, while BSEC Commissioner Md Saifuddin called for broader investor education and greater availability of risk-free securities.
IDLC Investments Managing Director Mesbah Uddin Ahmed highlighted Bangladesh’s unusually low market capitalisation-to-GDP ratio-about 7percent, compared to over 100percent in India and roughly 51percent in Vietnam-showing over-dependence on banks.
This imbalance, he said, fuels rising non-performing loans and asset-liability mismatches. To strengthen the financial system, he urged more quality listings, simpler processes, and a vibrant bond market.
Speakers also flagged weak financial reporting, audit manipulation, and limited investable stocks as pressing concerns.
With no IPOs in the last year, merchant banks are left idle, noted Mazeda Khatun, president of the Bangladesh Merchant Bankers Association, urging the government to strategically use the capital market for fundraising and state-owned firm listings.
Despite the challenges, optimism appeared as City Group’s executive director, Reza Uddin Ahmed, said the conglomerate is preparing for a stock market listing through governance reforms and enhanced reporting.
Experts concluded that restoring trust, strengthening governance, and speeding up regulatory processes are essential to deepen Bangladesh’s capital market and reduce pressure on the banking sector.
