The government has planned to extend tenure of the Tk 900 crore fund of Bangladesh Bank (BB) to support the small investors of the capital market.
The fund was set up in 2013 to help the small investors affected by the 2010 collapse of the share markets.
The decision was taken at a recent meeting of the Finance Ministry chaired by Additional Secretary of the Financial Institutions Department Mofiz Uddin Ahmed, sources said.
The meeting also decided to take more time for creation of a permanent fund as proposed by Bangladesh Bank and Bangladesh Securities and Exchange Commission (BSEC) had that wanted such a fund to help the small investors who have suffered losses in the capital market.
The meeting was called on August 18 in the wake of a letter sent by the BSEC to the Financial Institutions Department last June to convert the fund into a permanent one. The letter demanded extension of the loan repayment period until December 31, 2026.
"Although no decision was taken for a permanent fund right now, it has been decided to extend term of the existing Tk 900 crore fund. The decision on how long the tenure will be extended will be finalized after taking the opinion of the finance department," said senior official of the Finance Ministry.
Financial Institutions Department, however, has made some investor-friendly decisions on other issues.
For example, those who take a loan from this fund at the beginning, get the opportunity to repay it on 12 installments with interest in three years.
The Financial Institutions Department has decided that the loan repayment period for small investors from the fund will be five years. Besides, the term of the fund will also be extended for five years.
According to sources of Bangladesh Bank, the fund is currently being used for market stability instead of helping small investors. The capital market needs long-term investment. As a result, if a permanent fund is created, it can be used in difficult times of the capital market, said a central bank official.
The Investment Corporation of Bangladesh had also favoured the creation of a permanent fund.