Margin Loan Interest waiver & IPO quota for the loser of stock market
The government has waived half of the interest
on the margin loan of the retail stock market investors of Dhaka Stock Exchange the prime stock market in Bangladesh in a
much-awaited move to recompense them for their losses in the slide which shows a positive move. A
20 percent quota will be reserved for them in the
next IPOs this year and 2013, finance minister AMA Muhith told reporters after meeting capital market stakeholders on Sunday. The small investors who did not take margin loan will also get this facility, he said and defined those having invested up to Tk 1 million of their own money in the share market from 2009 to 2011 as small investors. "Merchant banks, brokerage houses and other lending organisations can waive 50 percent of the interest they were paid for one year against any affected account," Muhith said. "The remaining 50 percent interest will be transferred to a block account without interest and the investors will pay the money in quarterly instalments in three years," he said. The small investors who was affected in 2011 or 2011-12 fiscal year will get the interest waiver and the decisions will be implemented at once, according to the minister. Asked whether the lenders will agree with the decisions, Muhith said, "They pledged that they will waive the interest." "Of course, merchant banks will waive interest," Bangladesh Merchant Bankers Association president Mohammad A Hafiz said. In response to a question, the minister said the merchant banks and brokerage houses will decide how they will compensate. "They will consider it as their expenses. They will get tax break from the government in return." The written copy of the decisions made available to journalists reads, "After subtracting total interest (waivable and due) from debit balance of margin account on Nov 30 2011, there will be scope to reschedule the rest of the money by transferring to a different account for repaying in equal three-month installations in three years at a logical rate (highest 10 percent)." Bangladesh Bank will be requested to count the transferred money by deducting from the single party exposure of the bank of the relevant organization and exposure limit of banks. The lenders will give the affected accounts the chance to trade by giving new margin loan in existing system without considering the transferred money. The market will become stable on the decisions, Muhith hoped. The meeting started around noon following the finance minister's remarks on Feb 22 that the steps to compensate the small investors will be announced within 10 days. Representatives of the Securities and Exchange Commission, Dhaka Stock Exchange, Chittagong Stock Exchange, Bangladesh Bank, Investment Corporation of Bangladesh, Bangladesh Association of Banks and Bangladesh Merchant Bankers Association attended the meeting. The capital market turned volatile since December 2010, triggering violent protests for months. The shares and mutual funds lost their value by nearly 60 percent in the three phases up to the first week of this month. Prime minister Sheikh Hasina had met the market stakeholders in November last year and ordered compensation for the retail stocks investors who lost their money to the continuous fall in share prices. Later, a committee, headed by ICB managing director Mohammad Fayequzzaman, was formed to make proposals. Muhith made the Feb 22 remarks after the committee had submitted its report.
next IPOs this year and 2013, finance minister AMA Muhith told reporters after meeting capital market stakeholders on Sunday. The small investors who did not take margin loan will also get this facility, he said and defined those having invested up to Tk 1 million of their own money in the share market from 2009 to 2011 as small investors. "Merchant banks, brokerage houses and other lending organisations can waive 50 percent of the interest they were paid for one year against any affected account," Muhith said. "The remaining 50 percent interest will be transferred to a block account without interest and the investors will pay the money in quarterly instalments in three years," he said. The small investors who was affected in 2011 or 2011-12 fiscal year will get the interest waiver and the decisions will be implemented at once, according to the minister. Asked whether the lenders will agree with the decisions, Muhith said, "They pledged that they will waive the interest." "Of course, merchant banks will waive interest," Bangladesh Merchant Bankers Association president Mohammad A Hafiz said. In response to a question, the minister said the merchant banks and brokerage houses will decide how they will compensate. "They will consider it as their expenses. They will get tax break from the government in return." The written copy of the decisions made available to journalists reads, "After subtracting total interest (waivable and due) from debit balance of margin account on Nov 30 2011, there will be scope to reschedule the rest of the money by transferring to a different account for repaying in equal three-month installations in three years at a logical rate (highest 10 percent)." Bangladesh Bank will be requested to count the transferred money by deducting from the single party exposure of the bank of the relevant organization and exposure limit of banks. The lenders will give the affected accounts the chance to trade by giving new margin loan in existing system without considering the transferred money. The market will become stable on the decisions, Muhith hoped. The meeting started around noon following the finance minister's remarks on Feb 22 that the steps to compensate the small investors will be announced within 10 days. Representatives of the Securities and Exchange Commission, Dhaka Stock Exchange, Chittagong Stock Exchange, Bangladesh Bank, Investment Corporation of Bangladesh, Bangladesh Association of Banks and Bangladesh Merchant Bankers Association attended the meeting. The capital market turned volatile since December 2010, triggering violent protests for months. The shares and mutual funds lost their value by nearly 60 percent in the three phases up to the first week of this month. Prime minister Sheikh Hasina had met the market stakeholders in November last year and ordered compensation for the retail stocks investors who lost their money to the continuous fall in share prices. Later, a committee, headed by ICB managing director Mohammad Fayequzzaman, was formed to make proposals. Muhith made the Feb 22 remarks after the committee had submitted its report.
