Avoid long-term loans for corporates

Bangladesh Bank has advised banks to avoid giving long-term loans to corporate borrowers and instead work as mediators to raise funds from the capital market for projects.

“We discourage banks to provide long-term financing to avoid mismatch of asset liabilities,” said Faisal Ahmed, chief economist of the central bank, at the unveiling of the monetary policy stance for the second half of the fiscal year yesterday. The availability of long-term funds will increase along with the country's graduation into a middle-income nation.

“But bank dependency for long-term financing will have to be reduced. Many countries did the mistake of depending on banks for such investment and we do not want to do the same,” Ahmed added.  Banks were also asked to mobilise foreign savings of non-resident Bangladeshis into portfolio investment with a view to making the stockmarket more vibrant.

“The newly announced monetary policy remains in favour of the stockmarket,” said AB Mirza Azizul Islam, a former adviser to a caretaker government.

Ahmad Rashid Lali, a former president of the DSE Brokers Association of Bangladesh, echoed the same.

Stocks rebounded yesterday after a steep fall the previous day.

The DSEX, the benchmark general index of the Dhaka Stock Exchange, gained 31.73 points to close at 6,176.

Turnover stood at Tk 413 crore, up 15 percent from the previous day.

All the major large-cap sectors gained, led by the food and allied sector that advanced 3.39 percent.

On the DSE, 170 securities gained price, 114 declined and 50 remained unchanged. The DS30 and the DSES were 12.82 points and 11.90 points in the green respectively.