Bangladesh
6 years ago

Bangladesh Bank hints at taking steps to attract local, foreign portfolio funds

Picture used only for representation.
Picture used only for representation.

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Bangladesh Bank (BB) Governor Fazle Kabir has said the central bank will take steps to facilitate raising funds from the capital market through bonds. This, he said would help gradually reduce excessive dependency on banks for long-term financing.

At the same time, the central bank will provide necessary support to the banks to take initiatives to this effect, he also said.

The BB governor said these at a press conference, organised on the occasion of unveiling the Monetary Policy Statement (MPS) for the January-June period of this fiscal year at his office Monday.

The MPS said that the central bank will take some steps for attracting local and foreign funds to financial and capital markets along with bringing disciplines in loan disbursement activities and foreign debt liabilities.

The new MPS stressed on encouraging the banks to attract the savings and investments of NRBs (non-resident Bangladeshis) through sales of the government's attractive and profitable wage earners' bond and portfolio management.

BB chief economist Faisal Ahmed also emphasised raising dependency on the capital market instead of the banks for long-term financing for the sake of the country's sustained economic upliftment.

Besides, funds can be raised from abroad through NITA (Non-resident Investors Taka Account) both for the capital market and the bond market, he mentioned.

"Many countries have made mistakes by depending heavily on the banks for long-term financing. We do not want to do the same," Mr. Ahmed said while responding to a question.

He further noted that the capital market is the combination of stock market and bond market.

"We have stated in the monetary policy that the banks should not go for long-term financing while taking short-term deposits."

He said long-term financing needs to be enhanced in line with the nation's leap towards a middle-income country.

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