ICB writes to lenders for revolving funds

In a bid to retain funds for stock market support, the Investment Corporation of Bangladesh (ICB) on Monday wrote to several state-owned lenders to revolve their funds kept in ICB, said its Managing Director Md Abul Hossain.

The de-facto stock market maker in the last two weeks has been under a sudden pressure to arrange around Tk700 crore funds, mostly through selling listed securities, for repayments to some lenders, especially to Sonali Bank.

Responding to the Bangladesh Bank's order to come back to single party borrower exposure limit, Sonali Bank asked the ICB to pay back Tk565 crore, which the central bank finds excess over the ceiling.

To meet the payment obligation, the ICB after Eid-Ul-Fitr began liquidating some of its stock market assets by selling off some rising stocks.

As soon as the matter went public last weekend, the market suffered a sharp sell-off on Monday as the broad index in the Dhaka Stock Exchange fell by 2% to close at a nine-month low.

The Bangladesh Securities and Exchange Commission (BSEC) urged the ICB to request the lenders concerned for retaining the funds.

ICB boss told The Business Standard, "We requested for revolving the funds for another term, which is usually one year."

"Share sell-off by ICB was more a fear than a problem in the market," Abul Hossain said, adding that his firm has cashed in on only the rising stocks that did not hurt the market indices at all.

"On Monday, we sold off stocks worth only Tk1 crore, again, that was at the top circuit breaker. But the market still dropped drastically," he added.

However, ICB is likely to be equipped with some funds to buy some oversold stocks from Tuesday as the BSEC already announced that the Capital Market Stabilisation Fund (CMSF) would hand over another spell of Tk50 crore to the ICB so that it can support the market well.

CMSF, being built out of undisbursed dividends within listed firms, has already given the ICB Tk150 crore.