New Age | Apr 20,2020
The Bangladesh Merchant Bankers Association has urged the government to provide loans equivalent to six months of operating expenses to merchant bankers and stock brokers at 4 per cent interest rate and to postpone payments on existing bank loans to safeguard their businesses from the negative impacts of the nationwide lockdown imposed due to the coronavirus outbreak.
The association sent a letter to the finance ministry on April 15 demanding the incentive in the interest of the capital market.
The BMBA said that the government had declared a general holiday from March 26 to April 25 due to the contain the coronavirus pandemic which may be extended if the situation demanded.
During this period, the stock exchanges were also kept closed and no trading oy any other activities were taking place and so no income was generated for the merchant bankers and stock brokers.
Thus, the intermediaries were finding it very difficult to meet the operating expenses (staff salaries, rents, utility bills) and interest payments on the bank loans.
In the letter, the BMBA said that the allocation amount would be determined on the basis of the last audit report of the respective merchant banks and brokers.
The amount would be reimbursed in 24 instalments on a monthly basis from January 2021.
The BMBA also requested the government to stop payment of all instalments and interests against the current outstanding loans up to December 2020. The payments would resume from the March 2021 quarter.
The association in the letter also said that if the government did not lend its support, many employees might lose their jobs and many organisations might need to shut down their operations which would have a negative impact on the capital market.
The Chittagong Stock Exchange on Monday also proposed a stimulus package worth a total of Tk 1,050 crore to the finance ministry for the bourse’s small investors and brokers at the time of this severe crisis caused by the pandemic and the lockdown in the country.
Of the amount, the bourse wanted Tk 500 crore in special loans only for the CSE brokers, Tk 400 crore to subsidise interests on margin loans, Tk 80 crore for brokers’ office expenses, Tk 50 crore as waivers for BO account renewal fees and Tk 20 crore as incentive against corporate tax of the CSE.