The Investment Corporation of Bangladesh has received a loan of Tk聽3,000 crore from the Bangladesh Bank to help stabilise the capital market.
According to the information published on the Dhaka Stock Exchange website on Tuesday, the loan amount was deposited in ICB鈥簊 bank account on December 12 by the Bangladesh Bank.
This fund is intended to increase ICB鈥簊 investment capacity and repay loans and deposits taken at high interest rates, and the central bank set the new loan鈥檚 interest rate as variable.
The central bank provided this loan to the state-owned ICB with a sovereign guarantee from the government to improve its ability to invest in the capital market.
The Finance Division on November 13 confirmed that the government provided this guarantee to Bangladesh Bank for the Tk 3,000 crore loan.
A meeting on October 17 between the FID, central bank, Bangladesh Securities and Exchange Commission and ICB recommended that the ICB take necessary measures to obtain consent of the finance department for receiving the loan from the Bangladesh Bank.
The ICB then requested the FID to take necessary measures to provide a sovereign guarantee for sanctioning and disbursing the loan.
The Financial Institutions Division of the Ministry of Finance on November 5 issued a notification saying the government will provide the sovereign guaranty.
An official from the division said this guarantee will remain valid for 18 months.
ICB, the investment arm of the government in stocks, is currently facing a liquidity crisis due to losses from investments in risky shares.
In 2010, ICB recorded a net profit of Tk 436 crore, with its total investments in the capital market amounting to Tk 2,480 crore.
However, as of March 2024, the ICB reported a net loss of Tk 267 crore despite increasing its investments in the capital market to Tk 13,800 crore.
ICB鈥檚 total liabilities, including loans and deposits, have also increased significantly. In 2010, its liabilities stood at
Tk 2,500 crore, but now they have risen to approximately Tk 15,000 crore.
The losses have been primarily caused by the high interest ICB has to pay on loans taken to invest in the stock market.
The finance ministry assured that if ICB fails to repay the Tk 3,000 crore loan or the interest on it, the government will step in to repay the amount.
To boost the capital market, the government has already reduced the tax rate on capital gains.
This loan is another step to strengthen ICB鈥檚 financial capacity and bring stability to the stock market.
