The DSE Brokers Association of Bangladesh (DBA) on Wednesday submitted a set of policy recommendations to Bangladesh Bank, calling for reforms in the banking sector, capital market and broader financial system to strengthen stability and restore investor confidence.
The proposals were presented during a meeting between Bangladesh Bank Governor and a DBA delegation led by President Saiful Islam at the governor’s office at 3:00pm. Members of the DBA board of directors also attended the meeting, where participants discussed the current state of the capital market, challenges facing the banking sector, investor confidence and the long-term development of the financial system.
According to a press statement, the association proposed a market-based restructuring framework for troubled banks, arguing that repeated recapitalisation using taxpayers’ money is not a sustainable long-term solution. DBA said investment-driven restructuring, mergers and greater private-sector participation could help address weaknesses in the banking sector.
The association also recommended increasing the participation of large corporate borrowers in the capital market. DBA said excessive reliance on bank loans by major companies increases risks within the banking system and suggested making it mandatory for large corporations to raise part of their funding through bonds and equity instruments.
Among other recommendations, DBA proposed expanding non-competitive bidding opportunities in government securities to encourage greater participation by individual investors, brokers and non-primary dealer banks, which it said would improve market liquidity and investment opportunities.
The association also highlighted what it described as inconsistencies between income tax laws and capital preservation requirements. According to DBA, additional taxation on retained earnings and stock dividends is creating obstacles for banks and financial institutions seeking to strengthen their capital base. It called for greater coordination between Bangladesh Bank and the National Board of Revenue on the issue.
DBA further recommended including bond defaulters’ information in the Credit Information Bureau database, saying such a measure would improve transparency and accountability in the financial sector and help reduce default culture.
The association also advocated introducing a T+1 settlement cycle in the stock market. It said the shorter settlement period would reduce transaction risks, allow investors to reinvest funds more quickly and bring the market closer to international standards.
Another proposal focused on the introduction of an integrated domestic digital payment platform known as BUPI. DBA said such a platform would reduce dependence on international gateways, lower transaction costs and promote greater digital financial inclusion.
In addition, the association called for an increase in banks’ investment limits in open-end mutual funds, arguing that higher institutional participation would support the mutual fund sector and improve market stability and liquidity.
During the meeting, the Bangladesh Bank governor assured participants that the proposals would be considered carefully and emphasised the importance of coordinated efforts among all stakeholders to strengthen the country’s financial sector.
Saiful Islam thanked the governor for what he described as positive leadership and reform initiatives aimed at improving the financial sector and capital market. He also assured Bangladesh Bank of DBA’s continued cooperation in supporting reforms, development and stability in the country’s capital market.
