DBA urged Extend special fund for stock market investment

Staff Reporter :

The Dhaka Stock Exchange Brokers Association (DBA) has formally requested an extension of the special fund designated for stock market investments.
In a letter to Bangladesh Bank Governor Dr Ahsan H Mansur on January 28, the DBA urged the extension of the fund supporting the country’s stock market until 2030, proposing an increase in the fund size for each scheduled bank from Tk 200 crore to Tk 300 crore in light of ongoing economic challenges.
Talking to the New Nation DBA president, Md Saiful Islam said that due to the floor price, banks did not sell their shares.
If now banks sold their shares they would fall into huge losses and create huge pressure on the market, the stock market is not ready to handle this situation.
The special fund, introduced through DOS Circular No. 01 on February 10, 2020, aimed to stabilize the stock market and enhance liquidity flow. It directed scheduled banks, financial institutions, and market intermediaries, including brokerage houses and merchant banks, to invest in the stock market through their portfolios.
The fund, limited to Tk 200 crore per bank, is set to expire on February 9, 2025.
In the letter, DBA pointed out the challenging circumstances facing Bangladesh’s stock market. The market has been in a prolonged slump since late 2021, resulting in a significant decline in equity market capitalization-approximately 40%, or Tk 2,300 billion.
This downturn has affected over 2 million investors, including institutional investors such as banks, insurance companies, mutual funds, and market intermediaries like brokers.
The letter highlighted that many renowned scheduled banks have invested in the stock market through this special fund.
However, the current market conditions have led to significant losses of between 40 percent to 60percent on their portfolios.
If the fund expires as scheduled, it could lead to substantial losses in portfolio accounts, further negatively impacting investors and the stock market at large.
Considering the situation, the DBA has requested that the special fund be extended until 2030 and that the size of the fund for each bank be increased by an additional Tk 100 crore.
The association hopes that Bangladesh Bank will take these recommendations into account to safeguard the overall interest of the stock market.