Share Market continues to be fallen in Bangladesh. Investors are getting more angered with related authorities. But, Regulators, analysts and investors on Sunday said that only the central bank could put the capital market back on the track while Bangladesh Bank officials said that they had nothing to do in this regard as the bank does not deal with the capital market.
The latest move the Securities and Exchange Commission took on Sunday withdrawing the loan ceiling of Tk 10 crore for investors failed to halt the biggest ever crash of the two bourses as panicked investors continued to sell off their shares.
‘We have used all our instruments to halt the crash. We have nothing in our hands at the moment. Only the central bank can do something by taking steps to increase liquidity supply into the capital market,’ a Securities and Exchange Commission member told New Age on Sunday.
The Dhaka Stock Exchange general index fell by 1,169 points in five trading days, with a record 600 point on Sunday, as a wave of panic griped the investors after liquidity crisis on the capital market.
The SEC earlier increased the loan ratio for the investors to 1:1.5 from 1:1 but most of the brokerage houses and merchant banks failed to provide loans to investor at the maximum level because of credit crunch.
Market analysts and investors said that they thought if the Bangladesh Bank had increased the allowable limit of bank investment in the capital market from 10 per cent of their total liabilities to 20 per cent or 25 per cent or the banks had been given more time to reduce their investment from the capital market, the fall could have be halted.
A high central bank official, however, told New Age that the Bangladesh Bank had nothing to do in this regard as the related laws barred banks from investing more than 10 per cent of their total liabilities in the capital market.
‘This is absolutely wrong to blame the Bangladesh Bank for the current market situation. We do not deal with the capital market. The people [SEC] who deal with the capital market should be responsible for the current situation,’ he said.
When asked whether the central bank will allow the banks to increase their investment in the capital market, the official said, ‘We cannot break laws. If the government changes the law to allow banks to invest more, we will allow them. But, frankly speaking, it will take time for the government to bring about such changes.’
He said that the central bank had increased money supply through repo, the amount the central bank lends to commercial banks. ‘If the banks want, they can take the money. But do you thing the banks will take risk by investing in a sinking capital market?’ he said.
Dhaka University’s finance department professor Salahuddin Ahmed Khan said that the finance ministry, the central bank and the market regulators should immediately sit together to find out a solution to the current crisis of the capital market.
‘The latest SEC move of withdrawing the loan ceiling for investors is not taken in line with the current contractionary monetary policy of the central bank. Where is the money that could be given to investors in additional loans?’ he said.
Akter H Sannamat, managing director of the Prime Finance and Investment, said that the central bank should be more ‘flexible’ in allowing banks to invest in the capital market at the moment.
‘The market has already suffered a lot. In the interest of general investors, the government should do something to build confidence in investors,’ he said.
Many of the investors also blamed the Bangladesh Bank for the current market situation. ‘The governor has said that the share market is fatka bazar [a market of speculations]. The central bank should immediately take steps to increase money supply into the market,’ said Sohel Rahman, an investor.