Bangladesh Bank Governor Ahsan H Mansur and Finance Adviser Salehuddin Ahmed have called for stronger bond financing to bolster the country’s financial system.
At a seminar on bond and sukuk market potentials, organised by the Dhaka Stock Exchange on Monday, both emphasised the importance of a vibrant, liquid bond market to attract investment and reduce reliance on traditional bank financing.
Mansur proposed establishing a secondary market for savings certificates to provide liquidity, advocating for them to be fully tradable. He also said that long-term funds, such as pension, provident, and insurance funds, could support development projects through asset-backed bonds like Sukuk.
The governor pointed out the country’s heavy reliance on banks for financing, contrasting it with the global preference for bond financing. The global bond market stands at $130 trillion, or 130% of global GDP, compared to a $60 trillion banking industry and a $90 trillion equity market.
He said that many companies in Bangladesh prefer bank loans due to more favorable terms. “We need to move away from this bank-dependent culture,” he added.
The Sukuk market in Bangladesh remains at Tk 24,000 crore, while BRAC Bank alone disburses over Tk 10,000 crore annually. Mansur said that large infrastructure projects, such as the Jamuna and Padma bridges, could be securitized to expand the Sukuk market, attracting investors with guaranteed income from toll collections.
Mansur also said that government pension funds, private sector provident funds, and insurance funds could be significant long-term investors in infrastructure projects if a robust Sukuk market is developed.
Finance Adviser Salehuddin Ahmed reiterated the need for a well-developed bond market and acknowledged the risks of relying on banks. He confirmed that the government is working to drive the necessary changes.
University of New Orleans Professor M Kabir Hassan, in his keynote, stressed the need for credit rating reforms and pointed out that Bangladesh has an excessive eight agencies, compared to just two in economies like India, Malaysia, and Thailand, and three in China and Korea.
Anisuzzaman Chowdhury, Special Assistant to the Chief Advisor, emphasized the importance of learning from past mistakes to improve future projects.
The seminar was attended by key officials, including Financial Institutions Division Secretary Nazma Mobarek, Bangladesh Securities and Exchange Commission Chairman Khondker Rashed Maqsood, and prominent capital market figures.
