Bangladesh Bank Governor Abdur Rouf Talukder speaks during the opening session of the “Global Investors Week 2022” at the office of the Bangladesh Securities and Exchange Commission in the capital Dhaka on Monday. — New Age Photo
The Bangladesh Bank has placed greater emphasis on developing the bond market for long-term financing to curb the increase in delinquent loans from banks, its governor Abdur Rouf Talukder said on Monday.
He made the comment during the opening session of the “Global Investors Week-2022” at the office of the Bangladesh Securities and Exchange Commission in the capital Dhaka.
The program will continue until October 13.
Abdur Rouf said: “Our stock market is based on equities, the debt or bond market remains to be developed”.
Non-performing loans are one of the major problems in the banking sector, he said.
The NPL is rising mainly due to long-term funding by banks from their short-term deposits, as this has created a maturity mismatch, he said.
Companies from neighboring countries are raising capital in the capital market for commercial purposes while everyone else is borrowing from banks in Bangladesh, he said.
Companies went into default after missing loan repayments for a quarter, putting pressure on banks, he said.
Thus, the bond market must be developed for long-term financing, the governor said.
“Banks were issuing bonds to bolster the capital base and the bond underwriters were the other banks. But I made it compulsory to sell 50% of the bonds issued to other investors rather than to banks.
Government treasury bills will also soon be traded on the stock exchange, Abdur Rouf said.
The government has also reduced the interest for national savings certificates and set a cap of Tk 50 lakh for an individual buyer, which would help the stock market to flourish, he added.
Sheikh Mohammad Salim Ullah, Secretary of the Financial Institutions Division of the Ministry of Finance, also focused on the development of the bond market.
“The size of the bond market in developed countries is huge, but it is minimal in our country,” he said.
He also said that the prevailing problems on the road to the development of the capital market should be identified and resolved.
BSEC Chairman Shibli Rubayat-Ul-Islam said the commission had set up a capital market stabilization fund to bring stability to the market amid increased cash flow.
BSEC Commissioner Sheikh Shamsuddin Ahmed, Bangladesh Merchant Bankers Association Chairman Sayedur Rahman, DSE Brokers Association Chairman Richard D’Rozario were also present at the event.
