The Manila-based lender Asian Development Bank (ADB) is likely to extend the third Capital Market loan agreement by one more year as the term of the deal expired on June 30 last, an official said.
He mentioned that the finance ministry would request the ADB to extend the third Capital Market loan agreement by one more year.
The lender might extend the tenure up to December 2020, he added.
To this end, the Bangladesh Securities and Exchange Commission (BSEC) requested the Financial Institutions Division (FID) and the FID also requested the finance division to take the next course of action on the BSEC request.
When contacted, a deputy secretary of the FID said, "We have discussed with ADB the extension of the agreement. The lender has given green signal in this connection."
"We received a letter from the FID on extension of the third capital market loan agreement of ADB," a high official at the finance ministry told the FE on Thursday last.
An agreement was signed between the government and the ADB on November 22 2015 to provide a loan amounting to US$ 250 million as budgetary support for taking necessary steps relating to development of capital market under Capital Market Development Program-III (CMDP-III) implemented by the BSEC.
Out of the US$ 250 million, US$ 150 million is from ordinary capital resources (OCR) fund and US$ 100 million is as a soft loan from ADB.
Under the loan agreement on the CMDP-III, a total of 26 conditions have to be fulfilled by the financial market regulators like BSEC, Bangladesh Bank (BB) and Insurance Development and Regulatory Authority (IDRA).
ADB has already released US$ 80 million after compliance with eight conditions under the first tranche (dated December 15, 2015).
Disbursement of the remaining loan amounting to US$ 170 was subject to compliance with other 18 conditions within 18 months after the first tranche disbursement.
Out of the 18 conditions, the BSEC said 15 conditions were already met.
The ADB attached some conditions, including approval of the proposed organogram of the securities regulator, to the release of the second tranche of $170 million.
Currently, three conditions have not been met yet. They are: The organogram of the BSEC, approval of a new information and communications technology (ICT) procurement plan and endorsement of the draft asset investment rules for life and non-life insurance companies, according to the FID.