Stock stimulus package hits snag

The implementation of a stimulus package for stock investors, who lost money in last year's stockmarket crash, is in limbo, as stockbrokers and merchant banks did not deduct half of the interests on share credit in due time.
None but the state-owned institutions were able to give waiver on interests due to their bad financial condition.
The stockbrokers and merchant banks were supposed to waive 50 percent interests on share credit within September 30, while the authorities of the exchanges and the merchant banks association were instructed to submit comprehensive reports to the regulator on the interest waiver by Sunday last.
Another part of the package includes rescheduling facilities for the remaining 50 percent of the interests.
The Dhaka and Chittagong bourses have submitted the report to the Securities and Exchange Commission, where it was found that almost all the stockbrokers did not waive the interests.
However, the stockbrokers and merchant banks are still willing to implement the compensation package by waiving the interests, and they proposed some recommendations to the SEC.
“Along with the report, we have submitted a set of recommendations proposed by the stockbrokers,” said Al Maruf Khan, president of Chittagong Stock Exchange.
The stockbrokers demanded suspension of advance income tax at source from trading activities until adjustment of the waived amount, he said.
He said the stockbrokers provided credit to their clients after taking loans from banks at an interest of 15-16 percent. If they reschedule half of the credit at 10 percent in three years, they would not sustain in their stock business, he said.
“The stockbrokers demanded rescheduling facilities below 10 percent rate from banks for their loans,” he said.
He said the stockbrokers also demanded tax rebate facility, as they had paid the corporate tax for 2011, and the calculation of investors' losses was on the basis of 2011.
The government in October announced a stimulus package for stockmarket investors to restore stability in the market, and compensating the retail or small investors was part of the package.
Later, some 9.54 lakh investors were identified eligible to enjoy the compensation package.
The interest waiver and the rescheduling facilities are allotted only to investors who traded on share credit, commonly known as margin investors.