The Chittagong Stock Exchange (CSE) has proposed a Tk 10.50 billion package for its small investors and brokers to survive from huge business losses due to the ongoing crisis of pandemic Covid-19.
The trading on the bourses remained shut since the government announced general holiday since March 26 to contain the spread of deadly coronavirus.
Unlike others sectors, different stakeholders of Bangladesh capital market have been severely affected since January this year, the CSE said in a statement on Monday.
“We are now passing through a very crucial time due to the Covid-19 pandemic,” the CSE said in the statement.
The downtrend trend of the stock market has been continuing since 2018 and Covid-19 has escalated the sufferings of the small and institutional investors and different stakeholders of the Bangladesh stock market, it said.
The CSE has proposed a stimulus package of Tk 10.50 billion to the Ministry of Finance and Bangladesh Securities and Exchange Commission to consider for the CSE small investors and brokers at the time of severe crisis caused by pandemic and shutdown in the country.
Of the total Tk 10.50 billion, the port city’s bourses has proposed special loan only for CSE brokers worth Tk 5.0 billion, subsidize interest on margin loan worth Tk 4.0 billion, subsidize broker’s office expenses worth 800 million, waiver of BO account renew fee worth Tk 500 million and incentive of corporate tax of CSE worth Tk 200 million.
The CSE said that most of the brokers of CSE can not avail the loan facility from the recently declared Tk 100 billion loan facility by the Bangladesh Bank due to stringent criteria.
Therefore, to pave an easy access into the fund, CSE seeks Bangladesh Bank to allocate a special fund/loan of Tk 5.0 billion, which will be distributed by CSE among the CSE stock brokers after meeting eligible criteria set by CSE.
The port city’s bourse said small investors who have taken margin loan from their respective brokers of CSE at higher rate have to bear huge liability which cannot be met within the shortest possible time.
If the government offers a financial package to subsidize a majority portion of interest amount of Tk 4.0 billion, it will be of great assistance for the small/retail investors of CSE or instruct relevant authorities to waive interest amount for six months.
The CSE said due to shutdown and ongoing government holidays, brokers/dealers are not earning commission from their investors which is a mainstream income of their businesses.
Considering the salaries for the month of April, May and also the Eid bonus, the CSE urged government to subsidize 80 per cent of this expense which is Tk 800 million and include in the stimulation package.
Or, the government can arrange a soft loan for this amount of Tk 800 million as working capital at 2.0 per cent interest rate for the brokers so that they can overcome and meet their salary expenses.
The CSE has been always prompt in conveying the corporate tax and other government charges within due time.
However, CSE has been lagging behind to reach its revenue target since 2018 due to various reasons mentioned briefly above and the situation deemed to be soaring due to the ongoing Covid-19 turmoil.
Considering the fact, the CSE urged the government to reduce the corporate tax rate for CSE from 35 per cent to 10 per cent to confront the current battle and the harmonious survival of CSE.
The CSE also requested to waive BO account fee amount and include in the stimulus package for the greater interest of small investors.
The CSE board has requested the government to consider the above proposals as early as possible to survive from huge business losses due to the ongoing crisis of pandemic Covid-19.