Stocks refinance scheme extended by 2yrs with reduced interest rate

Mostafizur Rahman | Published: 23:18, Sep 27,2017 | Updated: 00:03, Sep 28,2017

 
 

The government extended the tenure of capital market refinancing scheme by two more years, cutting interest rate on loans from the scheme by 1.5 per cent to 6 per cent.
The government granted the extension following appeals from the Bangladesh Securities and Exchange Commission and the Investment Corporation of Bangladesh.
The tenure of the refinancing scheme was extended for the third time by two years to December 31, 2019 as the tenure of the scheme was scheduled to end on December 31, 2017 to ensure full utilisation of undisbursed loans, said ICB senior officials.
The government launched the scheme worth Tk 900 crore in 2013 for the investors who were affected by the 2010-11 market crash.
No loan from the scheme was disbursed in almost one year from April 21, 2016 due to lack of investors’ interest.
‘The loan disbursement will start soon when we receive the order from the finance ministry,’ an ICB official told New Age.
Despite repeated attempts, the fund supervision committee and the ICB could not disburse over Tk 258 crore from the fund, he said.
The ICB, the loan disbursement agency of the scheme, so far has distributed Tk 642.09 crore in loans from the Tk 900-crore scheme.
Of the distributed amount, Tk 10.72 crore of three companies still remains defaulted while the defaulted amount was Tk 23.51 crore as of December 31, 2016.
Of the organisations, dues of Fareast Stock and Bonds are Tk 4.51 crore, Prime Finance Capital Management Tk 3.31 crore and PFI Securities Tk 2.99 crore as of September 26, 2017.
Earlier in June last year, the finance ministry extended the refinance scheme by one year from December 31, 2016 and reduced interest rate to 7.50 per cent from 9 per cent to get better response from the investors.
In April 2016, the BSEC urged the government to reduce the interest rate from 7.5 per cent to 6.0 per cent. The regulator also urged the government to extend the tenure of the refinancing scheme by two more years.
Although the interest rate for the refinance loan has been reduced with extension of repayment timeframe, the facility will only be applicable for the fresh disbursement, while the existing loans will have to be paid in time, a member of the committee told New Age on Tuesday.
As per the new guidelines, the government will take interest at a rate of 4.0 per cent on loans while the ICB will take 1.0 per cent as service charge and merchant banks and stockbrokers will take 1.0 per cent as commission or charge.
According to the existing rules, the ICB gets funds at an interest rate of 5.0 per cent from the central bank. The ICB gets 1.0 per cent as charge while merchant banks and stockbrokers get 1.50 per cent.
The affected investors, who invested up to Tk 10 lakh each during the period between January, 2009 and November, 2011, are eligible for getting loan under the scheme.

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