Heal woes of stocks, keep interest rate low

Borrowing money continues to feature prominently in most societies but to borrow money to invest in the share market by using existing shares, cash money or managed funds, is linked with the rise of the stock markets. It is called a margin loan.

According to Dhaka Stock Exchange (DSE) and Chattogram Stock Exchange (CSE) officials, the amount of margin loan in the stocks is around Tk15,000 crore.

Recently, the margin loan has seen an increase in its interest to 15-17 per cent from 12-14 per cent a couple of months ago.

The higher the interest rate, the lower is the investment. That means the interest rate is inverse proportion to the interest rate.

The situation started to exacerbate when the single digit bank rate was removed.

The rate of margin loan was hiked when most of the company shares in DSE and CSE were stuck at the floor prices.

Despite knowing the bad patch of the share markets and the hapless margin loan takers, banks are insensitively charging high interest rates.

Now the question arises, should banks play like a one-eyed monster who shrugs off their duties of overseeing the wellbeing of the borrowers.

It is not a responsible banking business in any sense. Banks should come forward with their suggestions for the loanee if the investment sees any risk.

If a venture fails to be successful and sustainable, the loanee might be a loan defaulter.

The sick situation prevailing in the country’s share markets demands trial of the masterminds of looting of the share markets in 1996 and 2011.

As the regulators let the share market scammers scot-free, so the apathy of the policymakers to the share markets was exposed.

The authorities concerned are urged to take measures to heal the woes of the share markets and lower the interest rate of the margin loans, taken by the marginal borrowers.