BSEC initiates ICB reform

Bangladesh Securities and Exchange Commission (BSEC), the regulator of the capital market, has taken initiatives to make Investment Corporation of Bangladesh (ICB) more active in the wake of the corporation making consistent losses particularly in 2018-19 and 2019-20 fiscal years.

BSEC has already issued a notification seeking a consultant to review ICB's current and past financial and non-financial performances, overall activities, roles in stock market development and as a state-owned investment institution. The consulting firm will review inter alia ICB's actual business opportunities, investment strategies, portfolio risk analysis, portfolio diversification, investment decision-making process, source and use of funds and management control of ICB and its affiliates.

At a seminar organized by the Chittagong Stock Exchange (CSE) on July 18, BSEC chairman Prof Shibli Rubaiyat-ul Islam said that ICB is in trouble and the highest authority of the country has been informed about it. In order to overcome this situation, a proposal will be made to restructure the ICB with the aid of an internationally renowned organization. The government will provide necessary funding for the ICB to play its proper role in the stock market.

Meanwhile, the BSEC said in a statement that it would also review the loan policy, procedure and loan collection activities of ICB. It would also review compliance with relevant legislations, statutory obligations and infringement of the same.  The ICB will also assess the sentiments and expectations of the stakeholders in the stock market about ICB and capacity of the company to meet such expectations.

The consultant would review overall governance, institutional and legal framework of the organization, manpower and efficiency in managing the activities of ICB and its affiliates and make recommendations for the improvement of these issues.

In addition to reviewing the role of the concerned ministries, Bangladesh Bank and BSEC in overseeing the ICB, the consulting firm will also look into how the concerned agencies can assist the ICB in overcoming the current stalemate. The ICB and its affiliates will continue to investigate the cause of the ongoing crisis as well as provide advice on ways to overcome it.

It is learned that the condition of the institution has become more deplorable as it has not been able to recover the loan amount from the manufacturing sector and non-banking financial institutions. However, lending to such institutions is in no way related to the capital market.

In many cases, the companies in which ICB has invested have a board of directors and the company is unable to sell their shares due to lock-in causing significant reduction in the value of the ICB portfolio. Although the ICB has been subsidized several times by the government as capital assistance, the situation has not improved.

Professor Abu Ahmed, a capital market expert, told The Business Post that the ICB had failed to meet its goals and objectives. Sometimes when the cell pressure rises in the market, ICB buys some shares and tries to stop the fall immediately.

Controversy over ICB investments in various organizations arose due to lack of transparency. If the ICB works with transparency, the capital market will be benefitted. The current commission can do that if they want, he said.

sr/wi