Masud Khan says more quality companies and long-term financing instruments are needed to deepen Bangladesh’s capital market.
BSEC Chairman Masud Khan and other speakers attend the Capital Market Growth Dialogue at the Chattogram Chamber of Commerce and Industry today. Photo: Courtesy
Bangladesh needs more quality companies to enter the capital market to deepen the market and reduce businesses’ heavy reliance on bank financing, Bangladesh Securities and Exchange Commission (BSEC) Chairman Masud Khan said today (12 September).
“Good companies need to enter the capital market. We have to encourage them to do so,” he said while speaking as the chief guest at the Capital Market Growth Dialogue at the Chattogram Chamber of Commerce and Industry (CCCI) conference hall in Chattogram this afternoon.
CCCI and IDLC Investment Limited jointly organised the dialogue.
Khan said Bangladesh’s stock market remains relatively small compared with several regional markets when daily trading is measured against total market capitalisati
Citing recent figures, he said the ratio was around 0.14% in Bangladesh last week, compared with 0.19% in Pakistan, 0.23% in Thailand, 0.26% in India and 0.21% in Vietnam.
“If our daily trading volume reaches Tk1,500 crore, the ratio would rise to around 0.39%,” he said, stressing that increasing both the number and quality of listed companies is essential for sustained market growth.
The BSEC chairman said the regulator was working to simplify the process of bringing good companies to the market and considering new options for initial public offerings (IPOs) and direct listings.
He also said the commission planned to move fully towards an international-style book-building mechanism to improve price discovery.
Masud stressed the need for a clear distinction between the money market and the capital market.
According to him, banks should primarily provide short-term financing, while businesses should rely on the capital market for longer-term funding.
“Banks taking deposits for one year and lending for eight years is highly risky,” he said, referring to the asset-liability mismatch created by long-term bank lending.
He said Bangladesh’s underdeveloped capital market had forced banks to take on a larger role in long-term corporate financing, creating additional pressure on the banking sector.
CCCI President Amirul Haque urged the BSEC to change its institutional approach towards businesses and treat companies as partners rather than subordinates.
He called for fair treatment of listed and prospective companies, saying bureaucratic hurdles and inconsistent treatment discourage businesses from entering the capital market.
IDLC Chairman Kazi Mahmood Sattar said Bangladesh also needs to develop the debt segment of the capital market alongside equity financing.
Companies undertaking large infrastructure and development projects often require financing for 15 to 20 years, which banks cannot efficiently provide, he said.
“The capital market has two sides. We need to operate not only on the equity side but also on the debt side,” Sattar said.
Developing long-term bonds, mutual funds and other capital market instruments would help finance large projects while reducing pressure on commercial banks, he added.
DSE Chairman Mominul Islam and CSE Chairman AKM Habibur Rahman also spoke as special guests at the dialogue.
Source: The Business Standard
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