Weak bond market is intensifying pressure on the country’s banking sector, experts said on Thursday.
At a roundtable discussion, they also said that banks could not collect funds from any other sources, except deposits of clients, due to weak bond market, which also made the corporate sector completely dependent on the banking sector for funds.
The Bangladesh Institute of Bank Management arranged the roundtable titled ‘development of bond market in Bangladesh’ at its office in Dhaka.
At the programme, BIBM director (research, development and consultancy) Prashanta Kumar Banerjee presented a research paper on the issue.
A six-member team of the BIBM and Bangladesh Bank conducted the research.
He said that lots of new securities like zero coupon bond and fixed coupon bond would have to be introduced in the bond market in the country to make it popular among investors.
BB banking reform adviser SK Sur Chowdhury said that development of bond market became imperative for the country as both investors and authority would be benefited from the bond market.
The bond market in the country still remains at a very primary stage, he said, adding that BB, Bangladesh Securities and Exchange Commission and National Board of Revenue would have to work together to expand and popularise the market.
He also said that bank officials would also have to work carefully on the issue.
Amendment to the existing Repo law will also be needed to strengthen the bond market, he added.
BIBM Dr Muzaffer Ahmad Chair professor Barkat-e-Khuda said that the presence of bond market in the country was very limited compared with that of other countries.
The government should take initiatives to change the situation as the country needs long-term investment to achieve its development goals, he said.
BIBM supernumerary professor Helal Ahmed Chowdhury, also former managing director of Pubali Bank, said that the country would have to overcome the dependency only on the banking sector for financing its investment needs.
The bond market should get importance for financing for achieving sustainable development goals, he said.
BIBM supernumerary professor Yasin Ali said that it would not be possible to achieve the development
goals depending only on the bank financing.
He suggested a reduction in tax rate for expansion of the bond market to reduce pressure on the banking sector.
BIBM director general Toufic Ahmad Choudhury emphasised assimilation of bond market, banking sector and capital market for improvement of the liquidity situation in the country.
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