TK 900CR STOCK SCHEME
Fin min okyes guideline, sets 9pc interest rateHM Murtuza
The finance ministry has approved a guideline on disbursement of Tk 900 crore in loans to the small-scale investors affected by the market crash, raising the interest rate to 9 per cent from the proposed 8 per cent.
The ministry on Monday endorsed the guideline drafted by a five-member committee formed by the ministry.
The committee headed by Bangladesh Securities and Exchange Commission commissioner Arif Khan had suggested setting the interest rate at 8 per cent.
Earlier, a finance ministry guideline had proposed 10 per cent interest for the loans the small-scale investors will take from the merchant banks and brokerage houses under the scheme.
‘The BSEC has received the final guideline today [Tuesday],’ BSEC executive director Saifur Rahman told New Age.
According to the final guideline, the Investment Corporation of Bangladesh will get the fund of Tk 900 crore at 5 per cent interest from the Bangladesh Bank and the ICB will disburse it to the merchant banks and brokerage houses at 7 per cent interest.
The merchant banks and brokerage houses will be allowed to give loans to the affected small-scale investors at up to 9 per cent interest, the guideline said.
The draft guideline had suggested that the BB would charge the ICB 4 per cent interest for the fund and the ICB would disburse the fund at 6 per cent interest rate to the merchant banks and brokerage houses.
The final guideline said the affected small-scale investors would get the loans through their respective merchant banks and brokerages houses.
The merchant banks and brokerage houses will apply for the refinance scheme loans to a loan approval committee which will be formed by the ICB.
As per the guideline, the merchant banks and brokerage houses will be able to apply for loans only against the investors’ accounts which have already got 50 per cent interest waiver on margin loans as per the compensation package adopted by the government.
The merchant banks and brokerage houses have to provide sufficient documents with the application within the cut-off date to be set by the loan approval committee.
The investors have to pay back the loans within three years on a three-month instalment basis, the guideline said.
The merchant banks and brokerage houses will provide corporate guarantee against the loans for the security of the fund.
If any merchant bank or brokerage house fails to pay back the loans, regulators will take against it enforcement actions including cancellation of registration.
The name of the Tk 900-crore fund would be ‘capital market affected small investors assistance fund’ and the fund would be of three-year tenure to be expired in December 2016.
A supervision committee will be formed under a memorandum of understanding to be signed among Bangladesh Bank, Bangladesh Securities and Exchange Commission and Investment Corporation of Bangladesh to manage the fund.
In April this year, almost one year after the announcement of the scheme, the BSEC proposed that the finance ministry give Tk 1,266 crore in refinance for implementation of the compensation package.
The finance ministry in May approved the BSEC’s proposal and asked the BB to find out ways how it could be implemented. The BB in the same month proposed forming a fund worth Tk 900 crore to this end.
On July 7, the ministry released Tk 300 crore, the first phase of the Tk 900-crore refinance, in favour of the Bangladesh Bank but the ICB denied receiving the fund before preparing a guideline on using the fund.
The ministry will release the rest Tk 600 crore by December this year.
The government in March 2012 announced the compensation package that also included waiver of interest on margin loans for the investors who suffered losses during the market crash.
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