ADB lends $250m more to strengthen stockmarket

The Asian Development Bank has lent $250 million more to Bangladesh to assist the country's ongoing capital market reforms.

The third lending programme from the Manila-based lender for the capital markets will strengthen the Bangladesh Securities and Exchange Commission and support the establishment of a clearing and settlement company.

The loan will also aim to boost institutional investor demand, broaden the supply of financial instruments, including sukuk, and promote a more liquid government bond market.

It will also support new areas such as strengthening the Insurance Development and Regulatory Authority to promote the insurance sector's growth and stability and encourage insurers to use the capital market more.

Saifuddin Ahmed, joint secretary of the Economic Relations Division, and Kazuhiko Higuchi, country director of the ADB, signed an agreement to this effect at the ERD in Dhaka yesterday.

The ADB's loan will be complemented by technical assistance grant of $700,000 to support the implementation of key reforms, including the installation of an ICT system.

The lender will provide a $400,000 grant and will administer a $300,000 grant from the Republic of Korea's e-Asia and Knowledge Partnership Fund.

The programme will be completed by the end of 2017, the bank said in a statement.

The ADB has been supporting the government's initiatives to improve the capital market, and this new assistance will help the government strengthen the market further, according to Higuchi.

In the seventh five-year plan, which runs until 2019-20, the government aims to achieve 8 percent economic growth.

To achieve the goal, more private investment will be required, and further development of the capital market is an important catalyst.

The ADB-supported Second Capital Market Development Programme helped stabilise the stockmarket after the turmoil in 2010 and supported the passage of key financial sector legislation.