Bangladesh's Capital Market Faces Urgent Reform Calls
Bangladesh's capital market faces severe criticism from former regulators and industry leaders. They blame past failures for the current state, where the market's role in capital raising is negligible, and market capitalisation has plummeted.
Rizwan-ur-Rahman, former president of the Dhaka Chamber of Commerce and Industry (DCCI), lambasted regulators for their inaction. He argued that no strong company would consider listing in Bangladesh's current environment. His sentiments were echoed by Mohammad Farashuddin, a former governor of Bangladesh Bank, who pointed to a 1992 decision allowing scheduled banks to provide long-term loans as a hindrance to capital market growth.
The market's decline is stark. Market capitalisation has shrunk to 7.2% of GDP, a far cry from the nearly 40% it held in 2010. Meanwhile, neighbours like Sri Lanka have reached 22%, and India's market has surpassed the size of its economy. Over the last 16 years, 150 IPOs raised Tk11,614 crore, a figure barely matching BRAC Bank's annual loan growth. Bangladesh's stock market now contributes less than 1% of business capital.
Farashuddin called for separating bank ownership from management to promote development. A BSEC task force recommended direct listings for multinationals and large firms with turnovers above Tk1,000 crore, and mandatory listings for corporations with loans exceeding the same threshold.
Critics agree that Bangladesh's capital market needs urgent reform. The market's shrinking role and lack of confidence from investors and companies alike demand immediate action. Regulators must address these issues to revive the market and boost the economy.
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