‘Capital market to be center of long-term financing’ (video)

Professor Shibli Rubayat-Ul-Islam, former dean of business studies department of Dhaka University popularly known as ‘Oxford of East’. He is well-known for his honesty, courage and prudent. The merit, experience and leadership made him prosperous.

The government has appointed him as chairman of Bangladesh Securities and Exchange Commission (BSEC) recently. He has talked with Uday Hakim, advisory editor of Risingbd.com.

Uday Hakim: You were chairman of Insurance Corporation. You did some great work there. You have taken responsibility of Securities and Exchange Commission. What’s your vision now regarding capital market?

Shibli Rubayat-Ul-Islam: Actually, capital market is not equity based. Investors here wait always to see the price hike and fall in index. There are more components in the capital market. We could not maintain those. That’s why if anyone talks about capital market then we assume it as exchanging shares.

The price of oil had dropped to 5 to 10 USD in global market. If we would stock oil at that time and sell those in forward market then our foreign reserve would increase. We never did this kind of forward purchase.

Just think about the condition of our Fixed Deposit Receipt (FDR). Banks are providing loan for 5 to 10 years from the FDR money. As a result, it is creating a liquidity management system because banks are returning the amount of FDR to the depositors after scheduled time. But, loans are being provided for 5 to 10 years against that money. Ultimately, the liquidity is become imbalanced. The accounts become classified due to many reasons. Non-performing loan starts to increase in banking sector.

In foreign countries, bank customers don’t take loan for 5 to 10 years. The bank users take short and middle term loan such as trade financing, export finance, import finance, retail finance from banks.

If we provide bond for 10 years in capital market. Then, there is no problem to pay it back. If anyone fails to return the amount yearly, then there is a scope to refund it in the next year. Even, there is no possibility to get the account classified. So, capital market will be the center of long-term financing while banking sector will deal with short-term and middle-term financing. Consequently, liquidity management will be easy and the non-performing loan will be reduced.

Side by side, if capital market can manage long-term financing then trading firms will get release from the pressure of monthly installment and other issues. Ultimately, it will not create any bar on their businesses. If trading firms get this financial solutions then they will be able to do their business in relax way.

If capital market works properly then it will be easy for us to overcome these weakness. We are working with that determination. We want to take capital market in that place during our tenure.

Uday Hakim: Share market is the main source of long-term capital in developed countries. But, the picture is different in our country. Do you want to do it in your term?

Shibli Rubayat-Ul-Islam: Yes! Steps to release bonds have been taken already. On the contrary, people of our country don’t understand derivatives. So, financial literacy programs have been launched to provide idea in this regard. We will teach people about derivatives through financial literacy to make bonds popular. Later, derivatives market will be launched. Tasks are going on change some rules. We have emphasized on financial literacy. Market cap to be increased. Bond trade to be started. Government treasury to be launched. Ultimately one stage, people will not talk about the price of shares. Bond opportunities will be kept for general investors. It’s easy to learn use of bond. Already, market has been made ready regarding government Treasury bond issue. Discussion is underway with Bank about it. Treasury bond will be launched this year.

Uday Hakim: Various kinds of accumulated problems are prevailing in capital market. How are you taking these challenges?

Shibli Rubayat-Ul-Islam: Bangladesh is moving ahead. New types of challenge will come in future in the country. We have to face those. Steps to be taken to tackle those to go ahead. We should not fear these. Bad people will continue their bad tasks. We have to go forward leaving those problems. Critics are everywhere. Unfortunately, the number of critics is more here in our country. But, we need creator not criticizer. Everyone should play the rope of creator to take the country onward. Criticism should be constructive.




Uday Hakim/Nasim