ADB to lend $170m to reform capital market in Bangladesh

Bangladesh Sangbad Sangstha . Dhaka | Published: 22:15, Feb 15,2020 | Updated: 22:28, Feb 15,2020


The Asian Development Bank will provide second tranche loan of $170 million to conclude the third capital market development programme (CMDP) in Bangladesh.

‘ADB’s long-term engagement through its CMDP has transformed legal, regulatory and institutional market frameworks in line with the government’s development priority to mobilise long-term financing for productive investments, such as infrastructure and sustained economic growth toward middle-income status,’ said ADB financial sector specialist Takuya Hoshino.

The ADB approved the programme totalling $250 million in November, 2015 with a first tranche of $80 million loan to support vital capital market reforms accompanied by a technical assistance grant of $700,000, out of which $300,000 was financed by Korea’s e-Asia and Knowledge Partnership Fund to assist implementation of the reform actions, said an ADP press release on Saturday.

The bank has been actively supporting the government’s current capital market reform agenda since 2012 when the second CMDP was approved.

It aimed to rebuild market confidence after the stock market turbulence in December 2010 and put the capital market back onto a sustainable development path.

The programme resulted in the 10-year national capital market development master plan and critical legislations for ensuring the independence of the Bangladesh Securities Exchange Commission (BSEC) as a regulator, demutualising the two stock exchanges, better corporate governance, more reliable financial reporting and auditing, and insurance sector development.

The third CMDP was introduced in 2015 to build on the foundation established under the second programme to broaden and deepen the reach of the reforms and overcome remaining constraints in sustainable market development.

It focused on the actual implementation of regulatory and institutional reforms, such as for strengthening regulatory and supervisory capacity of BSEC, establishing a risk-based capital framework for market intermediaries, enhancing the clearing and settlement system, introducing new financial instruments by the two demutualized stock exchanges, establishing a financial reporting council and strengthening governance of the insurance sector.

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