Written by The Banking Post
The Investment Corporation of Bangladesh (ICB) has asked the government to extend the tenure of its Tk900 crore special fund by another five years, until December 2032, citing the fragile state of the capital market.
The state-run institution, which manages the fund aimed at stabilising the market, has formally written to the finance ministry seeking the extension, officials confirmed. The fund is currently due to expire in December 2027.
An ICB official said the proposal includes an option for loan recovery by March 2033. “If the fund is withdrawn prematurely, intermediaries will be forced to repay, which may trigger stock sales and hurt the market,” the official warned.
Originally created to rehabilitate small investors after the 2010 market crash, the special fund has since evolved into a revolving facility for intermediaries such as stockbrokers, merchant banks and asset managers.
Over the years, ICB has disbursed Tk2,472 crore in loans under the fund, of which Tk1,466 crore in principal and Tk113 crore in interest have been recovered, according to ICB data. Merchant banks accounted for the bulk of borrowing at Tk2,076 crore.
The fund, first distributed among 34,000 small investors, was later allowed to be reused in 2019 to support market liquidity. Its size has since grown to Tk1,098 crore by mid-2023.
Market insiders say an extension is crucial to prevent forced liquidation by intermediaries, especially after a bearish 2024-25 fiscal year that dragged the DSEX benchmark index down from 5,340 points to 4,836. The market has shown signs of recovery since July, led by bank and fundamentally strong stocks.
A brokerage chief who borrowed from the fund admitted repayment would be “difficult” if volatility persists.
