ADB lends another $170m to strengthen capital market

The Asian Development Bank has lent $170 million more to Bangladesh to assist the country's ongoing capital market reforms.

The lending will conclude the third capital market development programme in Bangladesh which was introduced in 2015 to build on the foundation established under the ADB's second programme to broaden and deepen the reach of the reforms.

The third programme's focus was on the actual implementation of regulatory and institutional reforms, such as for strengthening regulatory and supervisory capacity of the stock market regulator, establishing a risk-based capital framework for market intermediaries, enhancing the clearing and settlement system.

The loan will aim to introduce new financial instruments by the two demutualised stock exchanges, establish higher quality of financial reporting and strengthen governance of the insurance sector.

ADB approved the programme totalling $250 million in November 2015 with a first tranche $80 million loan to support vital capital market reforms.

It accompanied by a technical assistance grant of $700,000, out of which $300,000 was financed by the south Korean government's e-Asia and Knowledge Partnership Fund, to assist in the implementation of the reform actions.

Significant progress has been made to strengthen an enabling environment for sustainable capital market development under ADB's programme, said ADB Financial Sector Specialist Takuya Hoshino.

The government is encouraged to continue to resolve pending items under its long-term capital market development master plan, he added.

ADB has been supporting the government's current capital market reform agenda since 2012 when the Second Capital Market Development Programme was approved.

This aimed to rebuild market confidence after stock market turbulence in December 2010 and put the capital market back onto a sustainable development path.

The programme resulted in the 10-year national capital market development master plan and critical legislations for ensuring the independence of the BSEC as a regulator, better corporate governance, more reliable financial reporting and auditing, and insurance sector development.