Stock refinance scheme likely to get extension with lower rate

Dhaka,  Tue,  22 August 2017
Published : 20 May 2017, 21:46:11

Stock refinance scheme likely to get extension with lower rate

FE Report

The capital market refinancing scheme is expected to get an extension of its tenure with a cut in the lending rate.

A relevant department of the ministry of finance (MoF) was scrutinising a proposal in this regard earlier submitted by Bangladesh Securities and Exchange Commission (BSEC), a senior official of the MoF told the FE Saturday.

The BSEC had proposed reducing the annual rate of interest to 6.0 per cent from existing 9.0 per cent under the scheme.

The affected people who invested up to Tk 1.0 million during the period between January 2009 and November 2011 were eligible for the loan.

If the rate is set at 6.0 per cent, 4.0 per cent will go to the refinance fund and Investment Corporation of Bangladesh (ICB) while merchant bankers and brokerage firms will charge 1.0 per cent each as management fees.

"The proposal requires examination and opinion of a department concern as the matter is related to reduction of interest rate on loan. We will approve the BSEC's proposal immediately after getting the opinion of the department," said the official.

After the 2010-11 stock market debacles, the government had approved the refinancing scheme and later the central bank disbursed Tk 9.0 billion to the state-run ICB in three equal instalments-Tk 2.57 billion still remains undisbursed.

The securities regulator urged the ministry to reduce interest rates for facilitating utilisation of the remaining amount of the fund.

The committee, formed earlier to supervise the scheme, has so far realised Tk 6.67 billion, including interests, from the institutional borrowers who received the fund for small investors who were affected in the debacles.

The tenure of the refinancing scheme is scheduled to end on December 31 this year.

According to BSEC officials, the regulator has also proposed to extend the tenure of the refinancing scheme by two more years. As per the guidelines, the borrowers are not allowed to receive loans for the second time.

"The borrowers who already repaid the loans have also expressed the interest to receive loans for the second time. That's why the BSEC has proposed to allow such borrowers to receive loans for the second time by relaxing existing provision," said Mohammad Saifur Rahman, a BSEC executive director.
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