The finance ministry has extended by another six months the 20-per cent quota facility in the initial public offerings for the small-scale investors who were affected by the 2010 market crash.
The time extension came following a BSEC’s letter that was issued in May this year seeking another one year for the quota faculty despite the fact that the ministry earlier had said that the quota facility would not be extended further after June 30, 2017.
Since its introduction on March 4, 2012, the government has extended several times the quota facility.
The finance ministry has already informed the Bangladesh Securities and Exchange Commission about the decision, a BSEC official told New Age.
The Bank and Financial Institutions Division issued to the commission a letter that was received by the BSEC last week, the BSEC official said.
A general trend at the capital market is that IPO shares are usually traded at comparatively higher prices at the secondary market than their issue prices mainly due to a section of investors’ unusual attraction to those scrips in the first couple of trading sessions.
So, the quota facility allows the affected inventors to make some profit.
On the other hand, some institutional investors and general investors other than the affected ones have been demanding withdrawal of the quota facility as the facility lowers their chances of getting IPO shares.
Finance minister AMA Muhith on March 4, 2012 announced a special package for the capital market investors including the 20-per cent quota facility in IPOs for the year 2012-2013 for small-scale investors who suffered because of the 2010-11 stock plunge.
Under the package, 50 per cent of interest on the past year’s margin loans was also waived.
Following a free-fall in share prices on the stock market, prime minister Sheikh Hasina in November 2011 asked the BSEC to work out a package to minimise the losses the investors incurred.
Later the commission announced a stock market stimulus package containing short-, mid- and long-term measures.
Besides the quota and interest waiver facility, the government after the crash also launched a Tk 900-crore refinance scheme for the affected investors with a view to providing loans to the investors at 9 per cent interest in 2013.
The interest rate was later reduced to 7.50 per cent due to a stagnant state of loan disbursement under the scheme.
The supervision committee on the scheme in April this year proposed that the finance ministry cut further the interest rate to 6 per cent and extend the tenure of the scheme as Tk 258 crore of the fund remained idle for more than a month.
The ministry, however, is yet to finalise its decision in this regard, another BSEC official said.
According to a BSEC report on the 2010-11 stock market crash, at least 9.60 lakh investors were affected by the debacle.
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