Finance Minister AHM Mustafa Kamal on Sunday called for stock market stabilization.
He gave several instructions in this regard to relevant officials during a meeting with Bangladesh Bank Governor Fazle Kabir in the presence of Principal Finance Secretary Abdur Rouf Talukder and Financial Institutions Division (FID) Secretary. , Sheikh Mohammad Salim Ullah.
“Stock market stability was discussed during the meeting and the minister gave several instructions and points to be dealt with gradually,” Sheikh Mohammad Salim Ullah told Business Standard in the evening.
The economy has performed well in the face of the fallout from the pandemic and also amid new challenges arising from the Russian-Ukrainian conflict. Bangladesh’s economy continues to grow, Salim Ullah said, adding that the minister urged all regulators and parties to help stabilize the country’s stock market and facilitate investment.
Following the meeting, the central bank decided to double the size of the revolving fund for lending to small investors to Tk300 crore while extending its tenure which was due to end this year, the FID secretary confirmed.
The Public Investment Corporation of Bangladesh (ICB) is the operator of the fund and it will soon receive the additional amount.
Asked about the ongoing liquidity issues within the ICB, Salim Ullah said it “was discussed at the meeting so that these issues cannot add to market volatility.”
Bangladesh Bank’s instruction to Sonali Bank a few months ago to reduce its excessive positive balance with ICB which exceeded the exposure limit of a single borrower by more than Tk 500 crore, has sown the panic in the stock market as the ICB – the de facto market maker – suddenly felt pressure to sell shares in a declining market and repay its lender.
The ICB a week ago wrote to some of its lenders to renew their funds so it can continue to support the stock market.