Security And Exchange Commission (SEC) has decided to reduce the loan margin (given by merchant banks) according to the prescription of the Asian Development Bank. SEC has issued a circular in this regard. It says by 30 June of Year 2014 the loan margin should be reduced to 0.5. That is against TK.100 investment the merchant Banks will be able to lend TK.50. Currently , investors are getting loans at the ratio of 1:2.
Though merchant banks are supposed to deal with portfolio management and other works, merchant banks are interested in lending money only. This is causing a market based on loan which should be based on investment.
The merchant banks are saying that the time frame of reducing margin loan is sufficient to make the necessary adjustments. Gradual implementation will not impact the market much.