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Daily Business News All Daily Business News
22 Sep 2013
Stock market’s contribution to GDP insignificant: BIBM

The capital market’s contribution to country’s gross domestic product (GDP) is less than 1 percent, a recent study by Bangladesh Institute of Bank Management (BIBM) found. The study titled “Banks, stock market and economic growth: perspective of Bangladesh” found the capital market’s contribution to the GDP in 2011 to be only 0.17 percent and the banking sector’s around 44 percent. The results of the study were presented yesterday at a seminar in BIBM’s office in Dhaka.

Khandaker Ibrahim Khaled, a former deputy governor of Bangladesh Bank, said both the stock market and banking sector started their journeys at the same time after the independence. “Why is the stock market unable to contribute to the GDP as much as the banking sector? The government should look into the matter.” Although of different nature, but the banking sector did have to deal with crises. “But it moved forward, unlike the share market.”

Mohammad Yasin Ali, deputy managing director of Prime Bank, said there is a scope for increasing the stock market’s contribution to GDP through increasing the number of listing. Citing the section in the law which stipulates compulsory listing of companies whose paid-up capital is over Tk 50 crore, he said no one abides by the law. “The bank’s credit limit for these big-cap companies should be limited so that they get listed in the stock market,” said Ali, also a former member of Bangladesh Securities and Exchange Commission. Many of them do not want to come in the market fearing the strict transparency and accountability requirements, he said. “The government policy makers should take necessary steps to increase the listing of such companies,” he added.

Jahangir Miah, chief executive officer of Janata Capital and Investment, said many companies are now using the capital market as a source of financing, instead of taking credit from banks.

Source :: The Daily Star