Profits at most non-life insurance companies rose in the first quarter (January–March) of the current year compared to the same period last year mainly due to the introduction of zero commission in non-life insurance, cost cuts against the growth in marine insurance business.

Industry stakeholders attributed the increase to the introduction of zero commission in non-life insurance, companies' efforts to reduce management expenses, and growth in marine insurance business. They also believe the sector could see further improvement if geopolitical tensions in the Middle East ease.

Stakeholders noted that regulators have long received complaints about irregularities involving individual agents, including excessive commissions, mis-selling of policies, misleading customers, unnecessary policy sales, and artificially inflated premium income shown on paper.

The Insurance Development and Regulatory Authority (IDRA) also have information that some companies used multiple software systems and undisclosed bank accounts to conceal commission-related transactions.

However, the removal of commissions is expected to reduce management expenses and lift profitability. As commission-based sales decline, unnecessary policy sales may also fall. Premium pricing could become more realistic and customer-friendly, artificial inflation of premium income may ease, and healthier market competition is anticipated.

According to Dhaka Stock Exchange (DSE) data, 39 of 43 listed non-life insurers have published their quarterly results so far. Of these, 31 reported higher profits in the first quarter compared to a year earlier, while eight reported lower profits. The remaining four companies have yet to release their results.

Non-life insurance companies primarily cover risks such as fire, health, motor, marine, engineering, and liability.

Strong performers

Desh General Insurance led the pack with profit growth of around 120%, posting a net profit of Tk44 lakh in the quarter against Tk20 lakh a year earlier. Its share price rose 2.54% to Tk24.20 today (2 June).

Peoples Insurance reported a 105% increase in profit, reaching Tk5.96 crore from Tk2.91 crore a year ago. The company said lower agency commission expenses, reduced operating costs, and fewer claim settlements helped cut costs, lifting profit, operating cash flow, EPS, and NOCFPS.

Phoenix Insurance recorded a 67% rise in profit, earning Tk2.62 crore compared with Tk1.57 crore in the same period last year. The company cited higher premium and other income for the growth, while investment gains improved NAV per share and stronger cash collections boosted NOCFPS. Its share price rose 4.36% to Tk43.10 today.

Pragati Insurance posted a 55% increase in profit, with EPS rising to Tk1.63 from Tk1.05 a year earlier. The company attributed the growth to higher operating and other income, improved premium cash collections, and gains in investments, dividend and interest receivables, and cash equivalents, all of which strengthened NAV per share. Its share price also rose 3.07% to Tk70.40 today.

Under pressure

Agrani Insurance reported a 48% decline in profit, with EPS falling to 17 paisa from 33 paisa a year ago. The company cited lower premium and other income alongside higher claim settlements as the key drivers of the weaker performance.

United Insurance posted a 46–47% decline in profit, with net profit falling to Tk1.07 crore from Tk2 crore, and EPS dropping to Tk0.24 from Tk0.45.

Speaking to TBS, Managing Director of United Insurance Khawja Manzer Nadeem said, around 15% of total income went towards claim settlements during the quarter, largely tied to a fire incident at the airport that required payouts to clients including Unilever. He noted that the company's underlying business performance was otherwise positive, but the elevated claims overshadowed the gains.

Green Delta Insurance saw profit fall 29%, Mercantile Islami Insurance by 19%, and Rupali Insurance by 18% during the same quarter.

Overall, the majority of non-life insurers reported profit growth in the first quarter, though higher claims and softer investment income continued to weigh on a handful of companies.

The benchmark index of the Dhaka Stock Exchange (DSE) reclaimed the 5,400-point threshold today (2 June), hitting a three-month high as a sustained seven-day winning streak gathered pace.

Investor sentiment was significantly bolstered by fresh government commitments to restructure the stock market regulator with non-political, skilled professionals.

The rally, which has added 203 points to the broad index over the last seven trading sessions, reflects a growing confidence among market participants regarding the future governance and transparency of the capital market.

The benchmark DSEX index rose by 33 points to settle at 5,406 today, its highest level since early March.

The market's upward trajectory also resulted in a substantial increase in valuation, with the total market capitalisation of the premier bourse jumping by Tk12,700 crore over the last week to reach Tk6.88 lakh crore.

Market participation saw a notable surge as daily turnover increased by 18%, crossing the prestigious thousand-crore mark to settle at Tk1,080 crore.

The primary catalyst for today's surge was a landmark announcement by the Finance and Planning Minister at an event titled "Budget 2026-27: Expectations and Reality," organised by the Economic Reporters Forum.

The minister revealed that the Bangladesh Securities and Exchange Commission (BSEC) will be fully restructured within the next two weeks, adding that a new chairman and four commissioners are being appointed through a strictly professional process, free from political influence or consultation with political parties.

Analysts believe that if the government fulfills its promise of a professionally run BSEC, the market could sustain its current momentum and attract much-needed institutional and foreign investment in the coming months.

The optimism was visible across the trading floor, with the blue-chip DS30 index inching up by 5 points to close at 2,049.

Market breadth remained strongly positive as 230 issues advanced compared to 116 that declined, while 47 remained unchanged.

Sector-wise performance was led by general insurance, which posted a 2.28% return, followed by the tannery, cement, and non-bank financial institution (NBFI) sectors. Conversely, the jute, telecommunication, and travel and leisure sectors faced minor corrections.

In terms of individual stock activity, the banking sector remained the focus of high-volume trading. Jamuna Bank, BRAC Bank, and City Bank emerged as the top traded stocks, alongside RD Food and Agni Systems.

Among the top gainers, Meghna PET and Sonargaon Textile led the chart, both surging by nearly 10%. On the other hand, BIFC and International Leasing were among the top losers as investors shifted capital away from struggling financial entities toward fundamentally stronger scrips.

The bullish sentiment extended to the Chittagong Stock Exchange, where the Selective Categories' Index (CSCX) gained 62 points to finish at 9,277, and the All Share Price Index (CASPI) jumped 110 points to reach 15,080. However, unlike the Dhaka bourse, turnover at the port city exchange saw a 42% decline, standing at Tk27.19 crore.

Stocks edged higher in the first trading session after the week-long Eid vacation today (1 June), driven by strong investor participation on the buying side, which lifted both indices and turnover.

According to market data, the DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), rose 37 points to close at 5,372. Turnover also increased by 17% to Tk 912.38 crore.

Market momentum was largely supported by banking stocks, with strong buying interest in fundamentally sound issues. The banking sector alone accounted for seven of the top 10 contributors to the index gain.

BRAC Bank emerged as the single largest contributor, adding 5 points to the DSEX, according to data from the LankaBangla Financial Portal.

A majority of listed stocks recorded price gains. Of the traded securities, 179 advanced, 152 declined, while 55 remained unchanged at the DSE.

In its daily market commentary, EBL Securities said the benchmark index opened the post-Eid trading session on a positive note, supported by buoyant investor sentiment and continued interest in selective high-momentum stocks.

"The market was upbeat from the opening bell, building on post-Eid optimism that continued to fuel buying interest and drive broad-based price appreciation across most scrips for a sixth consecutive session," it said.

On the sectoral front, engineering stocks accounted for the highest share of turnover at 17.4%, followed by banking (16.0%) and pharmaceuticals (12.4%).

Most sectors posted positive returns, with IT, life insurance and banking leading the gains. In contrast, jute, tannery and general insurance sectors recorded the highest corrections.

Among individual movers, Sonargaon Textiles topped the gainers' list, rising 10% to Tk49.5 per share, followed by Golden Son, which gained 9.93% to Tk16.6, and Nahee Aluminum, up 9.32% to Tk37.5.

On the other hand, Premier Leasing led the losers, falling 7.40% to Tk2.5 per share, followed by Union Capital, down 6.52% to Tk4.3, and Prime Finance, which declined 6.06% to Tk3.1.

The Chittagong Stock Exchange (CSE) also ended the session in positive territory. The CSCX and CASPI indices advanced by 45.2 points and 61.0 points, respectively.

The Bangladesh Securities and Exchange Commission (BSEC) has again rejected Daffodil Computers Limited's plan to issue shares against loans, according to a stock exchange disclosure.

After facing the rejection of its initial plan, the IT sector firm in November last year reapplied to the commission for converting Tk49 crore loans, availed from one of its associate firms of the Daffodil Group, into equity.

With the shareholders' approval through an extra-ordinary general meeting (EGM), after revising its plan, it again applied to the commission, but the commission rejected converting loans into equity citing that the regulator is not in a position to accord its consent.

Daffodil Computers had availed Tk49.03 crore loans from Creative International, a concern of Daffodil Group. To offset the loan, it had planned to issue shares in favour of the lender company.

In its revised plan, the listed company sought stock market regulator nod to issue shares at Tk15 each with a plan of issuing total 3.27 crore shares.

In December 2024, its board had approved and subsequently submitted the plan to the commission to issue shares at Tk10 each against the loans.

Then, the commission rejected its share issuance plan as it had not secured its shareholders' nod. Later in December 2025, the company secured shareholders' nod on share issuance decision.

At that time, too, the securities regulator turned down the plan, citing that the move would unfairly favour the group's controlling interests while diluting the holdings and earnings of ordinary investors.

Now, Daffodil Computers faced a second time rejection for a share issuance plan for repayment of loans.

Daffodil Computers, one of the early technology companies listed on the stock exchange, remains a key entity within the Daffodil Group, which has diverse interests in IT, education, and media.

According to its quarterly financial statements, in the first nine months of the current fiscal year, it had reported declining revenue and profitability slightly.

In the July to March period, its revenue declined to Tk28.79 crore and net profit after tax to Tk1.16 crore, which was Tk30.28 crore and Tk1.56 crore respectively.

Daffodil Computers' shares closed 4.24% higher at Tk142.50 each on the Dhaka Stock Exchange (DSE).

Earlier, the company decided not to pay any dividend to its shareholders for the fiscal year of 2024-25. During the fiscal year, its earnings per share dropped by 24% to Tk0.16, compared to the previous year.

In 2015, Bangladesh and Vietnam shared the same S&P sovereign credit rating: BB–. A decade on, Vietnam stands at BB+, one notch from investment grade. Bangladesh has fallen to B+, its banking sector near the bottom of global risk rankings, and Fitch issued a negative outlook just days ago. This is not a sudden crisis. It is the accumulated cost of a decade of governance failures that Bangladesh's policymakers refused to confront while headline growth numbers held up.

Rating record

The table below tracks S&P's sovereign rating trajectory for all five countries over the past decade.

The divergence is unambiguous. Vietnam earned two upgrades from the same starting point; Bangladesh suffered one downgrade. Uzbekistan, unrated until 2019, has already surpassed Bangladesh. Kyrgyzstan – smaller, poorer and landlocked – debuted at B+ in March 2025, level with Bangladesh today despite having no prior rating. Cambodia, which Bangladesh should outrank on every structural metric, sits on exactly the same shelf. Bangladesh and Vietnam were rated identically in 2015. Today they are four notches apart – and the gap is widening.

How a decade was squandered

Three structural failures drove the decline. Forex reserves collapsed from $48 billion in August 2021 to below $20 billion in 2024, compounded by the revelation that headline figures had been inflated for years through inclusion of illiquid instruments. The banking sector failure was deeper: S&P places Bangladesh in Group 9 out of 10 on its Banking Industry Country Risk Assessment.

When Fitch downgraded Bangladesh in May 2024, NPLs stood at 9%; by December 2025 they had reached 30.6% as regulatory forbearance unwound. This is not a banking sector with a problem – it is a banking sector whose problem has finally been measured. A fiscal system generating tax revenue of just 7-8% of GDP provided no cushion, and the interest-revenue ratio hit 29% by end-2025, more than double the B-rated peer median. The student-led uprising of mid-2024, the fall of the Hasina government, and political uncertainty over elections compounded every structural vulnerability.

What peers did differently

Vietnam held to one strategy: export-led industrialisation with consistent macroeconomic management. The China-plus-one manufacturing shift found Vietnam ready; S&P upgraded it twice in six years. Bangladesh had the same garment base and labour cost advantage – and let the window close. Uzbekistan debuted at BB– in 2019 and has since climbed to BB: it brought Franklin Templeton in to manage Uzbekistan National Investment Fund, listed the fund on the London Stock Exchange in May 2026, raised $604 million with four times oversubscription, and made state enterprise governance internationally legible. Kyrgyzstan – smaller and poorer than Bangladesh, unrated until 2025 – raised $700 million in a debut Eurobond with three times oversubscription months after receiving its first rating. Both countries demonstrated institutional credibility and immediately accessed international capital markets. Bangladesh cannot.

Fitch warning of May 2026

On May 13, 2026, Fitch revised Bangladesh's outlook from stable to negative, affirming B+. The proximate trigger is the Middle East conflict – nearly half of Bangladesh's remittances originate there, and crude oil accounts for 15% of imports. But the conflict is the match, not the fuel: limited reform progress is eroding Bangladesh's capacity to absorb shocks.

Revenue fell when the IMF programme required it to rise. Constitutional reform is stagnant. Reserves at $29.5 billion sit below the B-rated median. A negative outlook shifts the burden of proof – Bangladesh must now demonstrate improvement, not merely avoid further deterioration. The three most likely triggers for an unscheduled downgrade to B are a fracture in the IMF programme, reserves falling below three months of import cover, or a major bank failure. At B – Pakistan's cohort – most institutional mandates prohibit exposure to Bangladesh sovereign instruments.

Three scenarios

The base case without decisive action is a downgrade to B within 12 to 18 months. The second scenario – the negative outlook resolved without a downgrade – requires the conflict to de-escalate, reserves to hold above four months of cover, the IMF programme to stay on track, and NPLs to show credible improvement. Every condition must hold simultaneously. The upgrade path toward BB– is a 2028 to 2030 horizon at the earliest, requiring sustained reserve improvement, measurable NPL reduction, and tax revenue approaching 10% of GDP.

What a rating downgrade actually means

Rating downgrades are not abstract. Their consequences are concrete, immediate, and compound across every layer of the economy. Six transmission channels matter most for Bangladesh.

Borrowing costs rise system-wide. Treasury bill yields reached 12% by late 2024 – up from under 7% two years earlier – as investors demanded a higher premium to hold government paper. Higher yields feed the fiscal deficit, which feeds more borrowing, which feeds higher yields still: a self-reinforcing spiral that a further downgrade accelerates.

Trade finance becomes costlier and harder to access. Bangladesh's garment export economy runs on letters of credit. LC confirmation charges levied by foreign correspondent banks are directly linked to the sovereign rating. Exporters operating on 3 to 5% margins absorb those charges or lose orders to competitors whose banks carry no such premium. A move to B would make this materially worse.

FDI dries up. FDI fell 8.8% in FY2024; Standard Chartered Bank Bangladesh's CEO attributed the decline explicitly to rating downgrades reducing risk-adjusted returns. A B rating places Bangladesh alongside Pakistan – no multinational building a medium-term Asia investment case allocates to a B-rated country when BB-rated alternatives exist.

Portfolio capital exits in advance. Many institutional mandates prohibit exposure below BB–. Bangladesh crossed that threshold in 2024. Portfolio investment was already a $111 million net outflow in FY2024. The Fitch negative outlook will have triggered repositioning across mandated investors before any formal rating action occurs.

The sovereign-bank nexus tightens. Public sector credit growth surged to 24% by October 2025 against private sector growth of just 6%. As the sovereign's rating falls, state-owned banks' access to foreign credit lines weakens and their funding costs rise. A sovereign downgrade cascades through the entire banking system the government owns.

LDC graduation compounds the risk. Bangladesh is supposed to graduate from Least Developed Country status in November 2026, losing preferential tariff access that partly underpins its EU garment market. That graduation was designed for a Bangladesh growing at 6 to 7%. Fitch forecasts 3.7% for FY2026. The combination of LDC graduation and rating deterioration creates a double vulnerability with no coherent plan to manage both simultaneously.

A downgrade is not just a signal – it is a tax on every borrower in Bangladesh, from the government to the garment exporter to the bank issuing a Letter of Credit, eventually every individual in Bangladesh.

Conclusion

Bangladesh's rating decline is not irreversible – but it is accelerating. The economic fundamentals remain: a large remittance base, a competitive garment sector, a young labour force. What has been absent is the institutional commitment to make those fundamentals credible to external investors. The rating agencies are explicit about what recovery requires: reserves above the B-rated median, NPLs measurably reduced, tax revenue approaching 10 percent of GDP, and reform continuity through a post-election government. What is absent is not knowledge of what to do. The Fitch negative outlook of May 2026 is a final warning that the window is closing – and that the next action, if nothing changes, will not be an affirmation.

Ershad Hossain, director, Putnam Capital Advisory Pte Ltd, Singapore

This commentary is prepared for informational purposes only and does not constitute investment advice. Putnam Capital Advisory Pte Ltd is a Singapore-incorporated advisory firm active in Bangladesh's capital markets.

The banking sector on the Dhaka bourse yesterday experienced a mixed response from investors following the central bank's latest stringent directives on dividend distribution.

The Bangladesh Bank has directed that commercial banks must maintain a minimum paid-up capital of Tk2,000 crore to declare any cash dividends. The policy, aimed at strengthening the sector's capital base, is expected to significantly restrict cash payouts for most listed lenders.

Under the new framework, which is set to take effect from 31 December 2026, even banks meeting the capital threshold and other regulatory requirements will be allowed to pay a maximum of 50% of declared dividends in cash.Market data shows an immediate impact: out of 36 listed banks, 12 declined, 14 remained unchanged, and five advanced as investors assessed the implications of the new directive

Currently, the room for cash dividend distribution appears extremely limited. Only BRAC Bank meets the Tk2,000 crore paid-up capital requirement while also being in a position to offer cash returns. Although National Bank has adequate capital, its elevated non-performing loan burden continues to constrain dividend eligibility under the new rules.

A senior analyst of a brokerage firm noted that banks below the Tk2,000 crore threshold will need to raise equity—either through rights issues or repeat public offerings—if they aim to comply with the requirement by 2026.

The market reaction was reflected in price movements across key players. NCC Bank led the decliners with a 2.67% fall, followed by Dutch-Bangla Bank down 2.01% and Dhaka Bank slipping 1.77%.

Other notable losers included Eastern Bank, NRB Commercial Bank, and Southeast Bank, all declining more than 1%.

On the gainers' side, ICB Islamic Bank surged 3.85%, while One Bank and BRAC Bank rose 2.67% and 1.05% respectively.

Trading in five other listed banks remained suspended due to ongoing merger proceedings involving Sammilito Islami Bank.Commenting on the policy shift, Mashrur Arefin, managing director and CEO of City Bank, said the regulation may help prevent weaker banks from eroding capital through excessive cash payouts, but warned that a blanket approach could be counterproductive.

He argued that treating strong and weak banks alike could weaken investor confidence in well-managed institutions.Instead, Mashrur Arefin suggested using the Capital Adequacy Ratio (CAR) as a more effective benchmark, noting that banks maintaining CAR levels of 17–18%, well above the 12.5% regulatory minimum, should have greater flexibility in rewarding shareholders.Market analysts echoed similar concerns, suggesting that a more sophisticated approach would involve linking dividend approvals to a bank's broader financial health indicators rather than just a fixed capital amount.

While they acknowledged the move as a step toward long-term financial stability, they cautioned that restricting cash dividends from otherwise strong banks could reduce the sector's appeal to institutional investors.

Trading and official activities on the country’s two stock exchanges—the Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE)—will resume tomorrow (Monday) after a week-long Eid-ul-Azha holiday.

The bourses remained closed from May 25 to May 31, including weekly holidays, on the occasion of Eid-ul-Azha, one of the largest religious festivals for Muslims.

Trading hours will return to the regular schedule, beginning at 10:00 am and continuing until 2:30 pm, including a 10-minute post-closing session, according to DSE officials.

Before the Eid break, the market ended slightly higher on May 24 as bargain hunters picked up undervalued blue-chip stocks, although overall investor sentiment remained cautious.

The benchmark DSEX index gained 7.5 points, or 0.14 per cent, to close at 5,336.

The DSE30 Index, comprising blue-chip stocks, edged up 0.54 points to 2,030, while the DSE Shariah Index (DSES) advanced 5 points to 1,082.

The Chittagong Stock Exchange also closed in positive territory on the final trading day before the holiday. The CSE All Share Price Index (CASPI) rose 71 points to 14,909, while the Selective Categories Index (CSCX) gained 38 points to finish at 9,169.

The Dhaka Stock Exchange (DSE) extended its rally for a fourth consecutive session today (23 May), as investor confidence strengthened following Finance and Planning Minister Amir Khosru Mahmud Chowdhury's pledge to ensure professional and skilled leadership at key financial institutions.

Speaking at a policy symposium in the capital, Finance and Planning Minister Amir Khosru Mahmud Chowdhury announced a complete ban on political appointments in the financial sector, including the Bangladesh Securities and Exchange Commission (BSEC).

He said the government would appoint only professional and competent individuals to key regulatory positions in a bid to restore investor confidence and strengthen corporate governance.

The announcement boosted market sentiment, triggering a broad-based rally and adding significantly to market capitalisation, according to market insiders.

The benchmark DSEX index rose 64 points, or 1.22%, to close at 5,328. Over the past four trading sessions, the index has gained a cumulative 125 points.

The blue-chip DS30 index also advanced strongly, climbing 34 points to finish at 2,030.

Market breadth remained positive, with 217 issues advancing, 117 declining, and 60 remaining unchanged.

Total market capitalisation at the premier bourse increased by Tk5,400 crore in a single day, while turnover rose 4% to Tk902 crore.

The minister also said the government would prioritise improving auditing standards and financial disclosure requirements to rebuild market credibility and attract foreign institutional investors.

According to EBL Securities' daily market review, the market opened strongly from the first trading bell, supported by aggressive buying in large-cap banking and telecom stocks.

The brokerage house said expectations of meaningful reforms, early signs of domestic macroeconomic stabilisation, and easing geopolitical tensions around the Strait of Hormuz – which had earlier dampened investor risk appetite – helped sustain the rally ahead of the Eid holidays.

Banking and telecom stocks led the gains, with major index contributors including BRAC Bank, Grameenphone, Robi Axiata, Square Pharmaceuticals, and City Bank.

Sector-wise, engineering stocks dominated turnover, accounting for 15.7% of total transactions, followed by pharmaceuticals at 15.4% and general insurance at 12.9%.

The cement sector posted the highest gain, rising 3.3%, followed by services at 2.8% and banking at 2.1%. The information technology sector was the only major laggard, declining 1.9%.

Several loss-making companies also featured among the day's top gainers, indicating renewed speculative activity among some investors. Meghna Cement Mills topped the gainers' list with a 9.86% rise, followed by Emerald Oil Industries, Aramit Cement, Regent Textile Mills, and Sena Insurance.

On the losing side, Daffodil Computers shed 9.36%, followed by Premier Leasing & Finance, Apex Spinning & Knitting Mills, and CAPM BDBL Mutual Fund 01.

In terms of liquidity, Asiatic Laboratories emerged as the most traded stock, followed by NCC Bank, RD Food, Mir Akhter Hossain, and Jamuna Bank.

The upbeat mood also spilled over to the Chittagong Stock Exchange (CSE), where key indices posted sharp gains. The Selective Categories' Index (CSCX) rose 81 points to 9,131, while the All Share Price Index (CASPI) gained 138 points to close at 14,838.

However, turnover at the port city bourse fell 20% to Tk24 crore.

Only one bank will be able to pay cash dividends next year after the Bangladesh Bank barred lenders with paid-up capital below Tk 2,000 crore from making such payouts.

In a circular issued yesterday, the Bangladesh Bank (BB) said the move is aimed at strengthening the capital base of the banking sector. It also seeks to improve the ability of commercial lenders to absorb future risks amid a challenging global and domestic financial environment.

Only BRAC Bank and National Bank PLC (NBL) meet the higher paid-up capital threshold among listed lenders.

However, National Bank remains in significant losses, leaving BRAC Bank as the only institution effectively positioned to meet the requirement for cash dividend payments.

Even for banks that meet the paid-up capital threshold, the central bank has capped cash dividends at 50 percent of the declared payout, with the remainder to be issued as stock dividends.

The new rules will take effect from dividend declarations for the year ending December 31, 2026 and onwards, according to the Supervision Policy and Coordination Department of Bangladesh Bank.

The policy is expected to affect most listed banks, raising concerns among market participants about shareholder returns.

While the measure may improve the resilience of the banking sector in the long run, it is likely to reduce flexibility for banks that are otherwise financially stable.

Mashrur Arefin, chairman of the Association of Bankers, Bangladesh (ABB), the apex body of the country’s commercial bank executives, said, “This is a good move towards strengthening the capital base of the banks.”

He said a few banks with weak capital bases did take cash out in the past. But the shareholders of healthy banks will now suffer. “That’s not good.”

The ABB chairman said the dividend rule should instead have been linked to the Capital Adequacy Ratio, which he argued would have been fairer for shareholders of well-performing banks.

“Shareholders have a reasonable expectation of cash returns when a bank is performing well. That incentive for supporting strong banking institutions is being overlooked,” said Arefin, who is also managing director and chief executive officer of City Bank.

“This will not help our agenda to encourage people to go to the capital market for their investments. I don’t know why CAR wasn’t considered. Is it because the government is seeking higher credit growth? But that connection is too distant.”

Banks can raise paid-up capital through rights shares to meet the Tk 2,000 crore threshold and retain eligibility for cash dividends. A rights issue allows existing shareholders to buy additional shares, usually at a discounted price, in proportion to their current holdings.

Asif Khan, president of CFA Society Bangladesh, also opposed linking dividend eligibility to paid-up capital, suggesting it should instead be tied to shareholders’ equity, capital adequacy ratio and provisioning levels.

He said that only one bank now effectively meets the Tk 2,000 crore threshold. So, most of the commercial lenders will be unable to pay cash dividends from next year, which could affect the capital market.

According to Dhaka Stock Exchange (DSE) data, National Bank PLC has the highest paid-up capital among listed lenders at Tk 3,219 crore, followed by BRAC Bank at Tk 2,289 crore and City Bank at Tk 1,749 crore.

Other major lenders include Eastern Bank (EBL), Islami Bank Bangladesh, United Commercial Bank, Pubali Bank, Bank Asia, Southeast Bank and Prime Bank, all of which fall below the paid-up capital threshold.

EBL’s paid-up capital stands at Tk 1,643 crore, Islami Bank Bangladesh’s at Tk 1,609 crore and United Commercial Bank’s at Tk 1,550 crore, according to Dhaka Stock Exchange (DSE) data.

Pubali Bank has Tk 1,496 crore, Bank Asia Tk 1,391 crore and Southeast Bank Tk 1,373 crore, while Prime Bank’s paid-up capital is Tk 1,218 crore.

Khan said many of these banks maintain strong capital adequacy ratios and have no provisioning shortfalls.

“So, why would they be barred from giving cash dividend?”

He also pointed to a possible policy conflict with the National Board of Revenue (NBR), which imposes higher tax on listed firms that do not pay cash dividends.

The Bangladesh Bank said the decision was taken considering the overall condition of the banking sector, depositor protection, financial resilience and the need to strengthen capital conservation buffers.

A senior central bank official said the policy was intended to improve the health of the banking sector and protect depositors’ interests.

Other eligibility criteria for dividend payout would remain unchanged, he added.

The role of the Bangladesh Securities and Exchange Commission (BSEC) and stock exchanges is set to become more prominent in mergers, acquisitions, demergers and other corporate restructuring activities involving listed companies under a new draft regulation.

The securities regulator today (23 May) published the draft "Bangladesh Securities and Exchange Commission (Corporate Restructuring) Rules, 2026" and invited opinions, suggestions and objections within two weeks of publication.

According to the draft rules, listed companies will have to submit merger or demerger schemes to the BSEC and stock exchanges for review before seeking court approval.

BSEC said listed companies frequently engage in mergers, demergers, amalgamations, acquisitions and other restructuring activities, which require proper valuation, adequate disclosures and greater market transparency, particularly to protect minority shareholders.

Speaking to The Business Standard, BSEC Director and Spokesperson Abul Kalam said companies would first need board approval for any restructuring proposal before approaching the court.

"The approved draft scheme must then be submitted to the BSEC and the stock exchanges. After incorporating the observations of the regulator and exchanges, companies will have to obtain shareholders' approval before going to court," he said.

He added that the proposed rules would not curtail the authority of companies or courts, as the BSEC and stock exchanges would act as observers in the process.

According to the draft, any listed company undertaking restructuring with another listed or non-listed entity must submit the draft scheme to the commission and relevant stock exchange within 30 days of board approval, along with prescribed documents.

Boards of directors will also be required to record opinions on the rationale for the restructuring, fairness of valuation, adequacy of disclosures, impact on minority shareholders, potential share dilution, related-party transactions and market integrity concerns.

The rules also require disclosure of independent directors' opinions and explanations regarding compliance with securities laws, regulations and listing conditions.

After receiving observations from the regulator and stock exchanges, companies will have to place the revised scheme before shareholders and creditors for approval through a special resolution. Companies must also disclose price-sensitive information and announce a record date.

The restructuring process will remain subject to court approval, although the BSEC may become a party to court proceedings if necessary.

The draft rules also prescribe extensive disclosure requirements for restructuring schemes, including transaction consideration in cash, shares, assets or securities; share swap ratios; transfer of liabilities; tax obligations; contingent liabilities; employee status; provident fund and gratuity arrangements; and measures to protect minority shareholders.

Companies must additionally disclose whether the restructuring could lead to a backdoor listing or reverse takeover, along with the benefits accruing to sponsors and controlling shareholders, the extent of dilution for public shareholders and the valuation methodologies used.

One of the most significant provisions relates to valuation requirements. Companies undertaking restructuring must appoint independent valuers from among audit firms enlisted with the commission or registered merchant bankers.

However, those firms or merchant bankers cannot act as statutory auditors or corporate advisers to the companies involved in the restructuring.

The valuer must certify that the valuation, exchange ratio or swap ratio is fair and reasonable and does not prejudice any class of shareholders or creditors. The valuation also cannot be determined solely on the basis of market price.

The draft rules make it mandatory to apply at least two absolute valuation methods and two relative valuation methods.

For absolute valuation, the rules mention methods such as Discounted Cash Flow (DCF), Dividend Discount Model (DDM), Residual Income Model (RIM) and Asset-Based Model.

For relative valuation, the draft includes Price-to-Earnings (P/E), Price-to-Book (P/B), Price-to-Sales (P/S) and EV/EBITDA-based methods.

The draft further states that the discount rate used in valuation cannot be lower than the yield on 10-year treasury bonds. Revenue growth assumptions also cannot exceed the company's average growth rate over the previous five years unless justified by capacity expansion under a Balancing, Modernisation, Rehabilitation and Expansion (BMRE) project.

Companies will also have to obtain no-objection certificates from banks, financial institutions, bondholders, secured creditors and holders of Islamic Shariah-based securities.

The draft rules include a detailed checklist of documents, including audited financial statements for the past five years, asset revaluation reports, physical inspection reports, land documents, loan papers, tax records, VAT returns, related-party transaction details, inventory statements, bank statements and due diligence certificates.

The rules also require approval of restructuring schemes by at least 75% of general shareholders, excluding sponsors, directors and shareholders holding 5% or more shares.

Bangladesh Bank has issued new directives for commercial banks regarding the declaration and distribution of cash dividends to shareholders, apparently to enhance the financial capacity of banks and reinforce the overall capital base of the banking sector.

Banks with a paid-up capital of less than Tk2,000 crore will not be allowed to declare any cash dividends, according to a circular issued by the central bank today (23 May).

Also, the banks that meet all statutory requirements and qualify to distribute profits can pay a maximum of 50% of their total declared dividends in cash.

The directives will come into effect from 31 December 2026.

The central bank clarified that while these new measures introduce stricter caps, all other existing instructions from previous relevant circulars, including the DOS circular issued on 13 March 2025, will remain fully effective.

No bank except BRAC Bank allowed to offer cash dividends

Under the new directives, only BRAC Bank will be allowed to declare cash dividends. Meanwhile, although National Bank has paid-up capital above the required target, it will not be able to provide dividends due to its high volume of non-performing loans.

A review of the data shows that among the currently well-performing banks in the capital market, none of the top-ranked banks in various indices, including The City Bank, Eastern Bank, Mutual Trust Bank, Prime Bank and Dutch-Bangla Bank, will be able to declare cash dividends.

Mashrur Arefin, managing director and CEO of City Bank, told TBS that the move has merit from a financial stability perspective, as some banks distributed high cash dividends despite weak capital positions.

He, however, expressed concern that the policy treats both strong and weak banks equally, which could negatively affect the stock market and investor confidence.

Mashrur said shareholders of well-managed banks deserve cash returns when banks perform consistently well, questioning why the Capital Adequacy Ratio (CAR) was not considered a key factor, arguing that banks with stronger CAR positions, such as 17-18% instead of the minimum 12.5%, should be allowed to provide cash dividends.

He also said he is waiting to see how tax regulations align with the new policy.

The move to strengthen banks' capital base is positive, as some weak banks previously paid excessive cash dividends despite poor financial conditions, said Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank.

A better approach would have been linking dividend approvals to the CAR, a practice followed in many countries, he said, notifying that Bangladesh's banking sector remains undercapitalised by global standards, while bank shares often fail to reflect actual performance.

Preventing well-capitalised banks from paying cash dividends could further weaken the stock market and reduce incentives for investors supporting financially stable institutions, added Syed Mahbubur.

In a move to convert its share money deposits into equity, Power Grid Company Bangladesh (PGCB), a state-owned power transmission company, is now set to issue preference shares to the government worth Tk1,529 crore.

In several tranches, Power Grid had already issued preference shares to the government worth Tk10,146 crore against funds received from the government for development projects.

Its balance sheet as of March 2026 shows that its preference share capital is 11 times higher than its ordinary share capital, with existing ordinary paid-up capital standing at Tk913.80 crore.

The Bangladesh Securities and Exchange Commission (BSEC) gave its consent on 20 May to issue 152.92 crore irredeemable and non-cumulative preference shares at a face value of Tk10 each.

The preference shares will be issued in favour of the Secretary, Power Division, Ministry of Power, Energy and Mineral Resources, against share money deposits for the year ended June 2025.

According to company sources, Power Grid received a substantial amount of funds from the government in the FY2024–25, against which it will now issue preference shares worth Tk1,529 crore.

Under the government financing structure, 60% of disbursed funds is treated as equity and the remainder as loans, with the equity portion recorded as share money deposits.

At the end of March 2026, PGCB's outstanding share money deposits stood at Tk3,376 crore.

The shares issuance follows to comply with a notification issued by the Financial Reporting Council (FRC). The accounting regulator FRC directive, issued in 2020, said share money deposits must be converted into the company's capital within six months.

It also directed companies to include share money deposits when calculating earnings per share and dividends as soon as the funds are deposited, even before securitisation.

In line with the directive to comply, Power Grid gradually issued preference shares in favor of the government rather than issuing ordinary shares.

Preference shares are a class of shares where dividends are paid to holders before any distribution to ordinary shareholders. The government will accordingly receive dividends on the preference shares at a fixed rate before any dividend is declared for general shareholders.

The dividend rate for the government on the preference shares will be determined as a percentage of total capital, calculated as 25% of the assumed share of net profit after tax attributable to the preference shareholders.

Power Grid Company secretary Md Jahangir Azad said "The preference share issuance is a continuous process as we are instructed to issue shares against share money deposits after the end of the fiscal year."

"We are issuing shares for the government that was taken for the 2024-25 fiscal year. Every year, we will issue shares to the government that will be taken each year," he added.

Earlier explaining the dividend mechanism to The Business Standard, Power Grid Company secretary Md Jahangir Azad said, "Suppose preference shares account for 25% of the company's paid-up capital. If the company makes a profit of Tk100 in a financial year, the entitlement of the preference shares would be Tk25 from that profit. The government would then receive a 25% dividend on this Tk25 allocated to the preference shares."

In the first nine months of the current fiscal year, Power Grid reported that its revenue slightly grew to Tk2,386 crore, and made a profit of Tk570 crore.

At the same time of the previous fiscal year, its revenue was Tk2,218 crore and incurred a loss of Tk31 crore due to foreign currency fluctuation as it has to pay its foreign loans in foreign currency. The company's shares closed at Tk33.20 yesterday, up 3.11% from the previous session.

Three private commercial banks — Mutual Trust Bank, Southeast Bank, and Trust Bank — have received formal approval from the Bangladesh Securities and Exchange Commission (BSEC) to disburse their declared stock dividends for the financial year ended 31 December 2025.

According to regulatory disclosures filed with the Dhaka Stock Exchange yesterday, the banks are utilising these stock issuances to strengthen their capital bases in alignment with Basel III requirements and to provide the necessary fiscal cushion for future business expansion.

These regulatory clearances allow the banks to convert retained earnings into equity paid-up capital, a strategic move often preferred by lenders to maintain high capital adequacy ratios while supporting larger credit portfolios.

Mutual Trust Bank received consent to issue a 12% stock dividend. The bank's financial performance for 2025 showed steady growth, with its consolidated earnings per share (EPS) rising to Tk3.14 from Tk2.93 in the previous year, while its net asset value (NAV) per share improved to Tk28.11.

The bank informed its stakeholders that it would soon re-fix and notify a new record date for dividend entitlement.

Southeast Bank secured the regulator's nod for a 7% stock dividend, which complements its 3% cash dividend recommendation. The bank recorded a sharp recovery in its bottom line, with consolidated EPS jumping to Tk2.51 in 2025 from just Tk0.32 in the preceding year. Its NAV per share also rose to Tk25.74.

The bank has scheduled 4 June as the record date for the stock dividend.

Trust Bank also obtained approval for a 5% stock dividend, having already recommended an 8% cash dividend for the same period. The lender reported a consolidated EPS of Tk3.38 and a NAV per share of Tk28.52 for the year. The record date for Trust Bank's dividend remains 11 June.

Trust Bank also obtained approval for a 5% stock dividend, having already recommended an 8% cash dividend for the same period. The lender reported a consolidated EPS of Tk3.38 and a NAV per share of

Tk28.52 for the year. The bank has scheduled 11 June as the record date for the stock dividend.

Union Capital Limited, a non-bank financial institution, has recommended no dividend for the financial year ended 31 December 2025, as the company continues to grapple with mounting losses and a deeply negative net asset value.

According to a price-sensitive disclosure filed with the Dhaka Stock Exchange (DSE) today (20 May), the company posted a consolidated net loss after tax of approximately Tk42.50 crore for the year.

Following the announcement, its share price slipped 2.08% to Tk4.70 on the premier bourse.

The company's consolidated earnings per share (EPS) for 2025 stood at negative Tk2.46 — an improvement from the negative Tk11.99 recorded in 2024.

Management attributed the narrower loss primarily to reduced provision requirements for loans and advances, higher recoveries from written-off clients, and lower operating expenses through cost control measures.

Despite the improvement in EPS, the consolidated net asset value (NAV) per share deteriorated further to negative Tk65.49, from negative Tk63.02 a year earlier.

The overall loss was largely driven by a decline in net interest income, investment income, and fee and commission earnings.

In the first quarter of 2026 (January–March), Union Capital reported a consolidated net loss after tax of Tk16.31 crore. Quarterly consolidated EPS fell sharply to negative Tk0.95, from negative Tk0.07 in the same period last year. The company said the decline was driven by lower interest income and reduced provision releases stemming from weaker recoveries against non-performing loans.

As of 31 March 2026, the consolidated NAV per share stood at negative Tk66.43, while net operating cash flow per share remained negative at Tk0.61.

The company has scheduled its Annual General Meeting for 29 July 2026, with the record date for entitlement set for 22 June, when shareholders will review the annual performance alongside other agenda items.

In a major move to attract more foreign investment into the country's struggling stock market, Bangladesh Bank has eliminated the requirement for an auditor's certificate for every transaction made by non-resident investors.

Under the new directive issued today (20 May), the central bank has streamlined the tax collection process for Non-Resident Investor Taka Accounts (NITA), allowing for the immediate credit of sale proceeds and automated tax withholding by banks.

Previously, foreign investors were required to obtain a certificate from a chartered accountant for every single trade to determine capital gains tax before funds could be reinvested or sent abroad. This practice frequently caused significant delays, increased compliance costs, and discouraged active trading.

According to the central bank's circular, authorised dealer (AD) banks will now ensure the deduction or withholding of applicable taxes on capital gains directly from the sale proceeds of shares or securities held by non-resident investors. These proceeds will be credited directly to the respective NITA for eventual payment to the government exchequer prior to repatriation.

Speaking to The Business Standard, a senior official from Bangladesh Bank said under the previous system, non-resident investors used to buy stock market shares, and selling them would yield profits.

"After deducting taxes from these profits, the remaining amount was credited to their accounts. In other words, profits were deposited only after tax deduction. Many had raised objections to this method because the entire process – including tax calculations and obtaining certificates – took nearly 15 days," the official said.

He further mentioned that under the newly introduced rules, the amount can be credited to the account immediately upon selling the shares.

"However, when repatriating funds outside Bangladesh, the capital gains tax and the actual profit made from the share sale must be kept separate, allowing the remaining balance to be repatriated. This ensures the account is credited instantly, enabling the investor to reinvest in shares right away if they wish. If depositing funds into the account takes 30 days, it delays their reinvestment in the stock market. Now, reinvesting will take much less time, which serves as an incentive to attract foreign investment into the country."

The official added that Bangladesh Bank granted this approval in response to an application from the Dhaka Stock Exchange (DSE).

Misbah Uddin Affan Yusuf, managing director and CEO of City Brokerage Limited, told TBS that this was a long-standing barrier for international participants.

"Previously, even for small transactions, clients had to manually collect a CA certificate and submit it to their custodian bank. While large institutional investors could manage this through big firms like KPMG, it was a nightmare for smaller investors," Yusuf explained.

"This lengthy process essentially prevented foreign investors from trading freely. Now, the bank handles the 15% capital gains tax calculation and issues the certificate only at the time of repatriation. This is a massive relief that allows for seamless trading," he added.

Saiful Islam, president of the DSE Brokers Association (DBA), hailed the move as a "fundamental change" for the market.

"DSE and DBA have written to the central bank multiple times since the introduction of the capital gains tax, urging them to simplify NITA transactions. Finally, this issue has been resolved. It removes the hurdles for the free entry and exit of foreign capital, which is vital for market liquidity," he said.

The balances in a NITA can be used to purchase listed shares and IPOs. These balances, along with dividends and sale proceeds, are freely remittable abroad in equivalent foreign exchange, provided the applicable taxes have been withheld by the handling bank as per the new simplified rules, he added.

How NITA works for foreign investors

According to the Foreign Exchange Guideline of Bangladesh Bank, Non-Resident Bangladeshis (NRBs) and foreign individuals can invest in the local capital market using freely convertible foreign currency remitted from abroad through formal banking channels.

To begin investing, an investor needs two accounts: a Foreign Currency (FC) account for inward and outward remittances, and a NITA for converting that foreign currency into Taka to buy securities. These must be opened with an Authorized Dealer bank in Bangladesh.

The benchmark indices of the Dhaka Stock Exchange (DSE) posted a slight gain today (19 May), snapping a two-session losing streak in a modest market recovery.

The gains, however, lacked conviction. Trading activity remained subdued as investor participation stayed low, with many market players continuing to exercise caution amid a weak short-term trend. Restrained buying interest prevented any broad-based rally from taking shape.

The DSEX rose 8 points to close at 5,212. The blue-chip DS30 index added 2 points to settle at 1,970, while the Shariah-based DSES index edged up 3 points to 1,059.

Advancers outnumbered decliners — 181 issues gained against 138 that fell, with 74 stocks ending unchanged. Market turnover, however, slipped 6.89% to Tk676 crore from Tk726 crore in the previous session.

In its daily market review, EBL Securities noted that the bourse traded largely flat as investors' selectively accumulated large-cap stocks, though participation remained muted amid persistent caution over near-term market momentum. Indices held in positive territory throughout the session on resilient bargain-hunting interest.

Trading volumes were also weighed down by investors trimming leveraged positions and managing liquidity ahead of upcoming festival holidays, the brokerage added.

Market indices remained firmly in positive territory, with resilient bargain-hunting interest throughout the session.

However, trading activity stayed relatively subdued amid sustained cautious sentiment, while paring back exposure from leveraged positions and liquidity considerations ahead of upcoming festival holidays also somewhat weighed on the market's overall turnover.

On the sectoral front, Pharmaceuticals led turnover with a 16.9% share, followed by General Insurance at 13.6% and Banking at 11.4%. Among sector performances, Ceramic and Jute each rose 1.9%, and Services gained 1.3%. On the downside, Mutual Funds fell 0.8%, Food declined 0.6%, and Life Insurance dropped 0.5%.

At the Chattogram Stock Exchange (CSE), the market also closed in the green. The Selective Categories' Index (CSCX) gained 23.0 points, while the All Share Price Index (CASPI) rose 31.1 points.

Listed companies in Bangladesh may soon have to overhaul their boards under rules that would limit independent director tenures, bar executives from holding dual roles and give the securities regulator direct power to remove directors.
The changes have been proposed in the draft “Bangladesh Securities and Exchange Commission (Corporate Governance) Rules, 2026” published by the commission for stakeholder feedback recently.
The draft, open for comments until May 31, would replace the existing corporate governance code with a more comprehensive rule-based framework, tightening oversight over board composition, executive appointments, subsidiary operations and documentation requirements.

INDEPENDENT DIRECTORS
Some of the major proposed changes relate to independent directors.

The draft states that an independent director can serve a maximum of two consecutive three-year terms, after which a three-year gap is required before reappointment.

The post of independent directors cannot remain vacant for more than 90 days, it also states.

The BSEC has also proposed giving itself direct authority to directly remove independent directors found to pose “a risk to the future of the company.”

The commission may make a pool of eligible candidates for independent director positions, with remuneration governed by board-approved policy and specified in appointment letters, according to the draft.

Independent directors must have at least 12 years of cumulative experience across business, corporate, government offices, academic or professional fields. However, female independent directors would need at least eight years.

BOARD AND TOP MANAGEMENT

The draft rules require that boards include at least one female director – a directive the BSEC has been pushing for years.

In a bid to strengthen separation of powers, the proposed rules mandate that the chairman and managing director or CEO must be different individuals .The chairman must also be elected from among non-executive directors.

Any director of a stock exchange, depository, central counterparty, stockbroker, stock dealer or merchant banker — except an independent director representing a holding company — would be ineligible to serve on the board of a listed company.

Under the proposed rules, a CEO or managing director of a listed company cannot simultaneously hold the same position at another listed company.

The posts of CEO, company secretary, chief financial officer (CFO) and head of internal audit and compliance must each be held by separate individuals. In addition, none of them can hold executive positions at another company concurrently, though the commission may allow CFOs or company secretaries to serve within group companies under certain conditions.

The draft rules also state that no top executive can be removed without board approval and immediate disclosure to the commission and stock exchanges.

AUDIT COMMITTEE AND GOVERNANCE

The audit committee must meet at least four times a year and include at least one financially literate independent director with a minimum of 10 years of accounting or financial management experience.

The BSEC has further proposed stronger documentation requirements for board and shareholder meetings.

The draft rules state that companies must preserve board and shareholder meeting minutes permanently, record online participation details and formally document dissenting opinions. Directors whose objections are not recorded in minutes can file complaints with the commission within 30 days.

All listed companies must arrange governance programmes for directors within one year of the rules taking effect. Newly appointed directors may also be required to complete certification programmes from institutions recognised by the commission.

The new rules will apply to all companies with ordinary shares listed on the main board, the SME board and alternative trading board of the stock exchanges, as well as any public interest entity.

SUBSIDIARIES

The rules propose tighter oversight of subsidiary companies as well.

At least one independent director from the holding company — preferably the chairman of the audit committee — would have to sit on the board of the subsidiary company.

Holding company boards and audit committees would also be required to review subsidiary affairs, investments and inter-company transactions.

The regulator will review the feedback before finalising the framework.

Rather than strengthening the capital market, the government is playing its habitual game of relying on banks for business financing.

This is evident in the central bank's latest decision to expand the single borrower exposure limit from 15 per cent to 25 per cent of a bank's capital.

The suspension of the effectiveness of the previous 15 per cent limit until June 2028 is feared to discourage new listings of companies from large conglomerates.

"The expansion of the exposure limit is a repetition of the same mistake that led to a systematic damage to the financial ecosystem," said Md. Ashequr Rahman, managing director of Midway Securities.

Long-term financing through banks has continued over the years against short-term deposits, which has proved to be disastrous for the banking sector after a substantial amount of loans turned sour.

Before the last national election, key representatives of the BNP said they, if voted to power, would prioritise the capital market instead of the money market in financing.

In November last year, BNP leader Amir Khosru Mahmud Chowdhury, the incumbent finance minister, said at the Bangladesh Economic Summit that the party would put emphasis on energizing the capital market to lessen pressure on banks.Bangladesh travel guide

"We don't want to go to banks that are overused. We want to make the capital market vibrant and we're very serious about it," said Mr Chowdhury at the time.

The ruling party's election manifesto also included plans for the development of the capital market.

"All political parties spoke about a free economy, but eventually they preferred a managed economy after assuming office," said Mr Rahman while speaking with The FE over the phone on the latest policy of the Bangladesh Bank.

The change has been brought apparently to ease financial stress of the borrowers amid economic volatility.

With the high non-performing loan (NPL) ratio, however, the banks will face mounting pressure.

The overall banking sector's NPL ratio stood at over 30 per cent in December last year and deposits grew at a rate of 11.28 per cent year-on-year in February this year.

The deposit growth has not created enough room for fresh lending.

A lender having a 30 per cent NPL ratio means it has to serve purposes worth Tk 100 by Tk 70.

On receipt of fresh deposits worth Tk 11.28, the bank will be able to do the same job with Tk 81.28. Still, there is a shortfall of Tk 18.72. Besides, fresh deposits come with fresh interest liability.Global economy overview

The bank would have been in a better situation in terms of liquidity and for fresh lending had the deposit growth been at least equivalent to the NPL ratio.

In a situation like this, the expansion of the single borrower's exposure limit is not conducive to creating a healthy financial ecosystem.

Mr Rahman, of Midway Securities, said the BB decision is aimed at easing financial stress of business groups but they will borrow money from banks to execute long-term plans. "Will the central bank be able to restore the previous 15 per cent limit after two years?"

In the pre-budget meeting held between the National Board of Revenue (NBR) and stakeholders of the capital market, it was discussed that the companies that would exhaust a certain limit of credit must go to the capital market to raise more capital and that money could be raised through both equity and debt instruments.

After the promise of prioritising the capital market by the government and subsequent discussions in this regard with the revenue board, the central bank expanded the single borrower exposure limit.

Stakeholders of the capital market said both the securities regulator and the central bank are regulatory bodies. But the central bank enjoys the authority to take decisions without consulting other regulators.

On the other hand, since its inception in 1993, the Bangladesh Securities and Exchange Commission (BSEC) has failed to establish its importance before the government and other regulatory bodies.

Alongside the failure of the BSEC, stock exchanges and professional bodies of the capital market have also been unable to play any role in bringing good companies, which heavily rely on bank financing, to the secondary market.

The Dhaka Stock Exchange (DSE) and BRAC EPL Investments today (18 May) signed an agreement to facilitate subscription of the Sajida Orange Zero-Coupon Bond to mobilise capital specifically for women-focused economic empowerment and gender-inclusive development through the bourse's Electronic Subscription System (ESS).

The subscription process began on 18 May and will continue until 23 May, allowing eligible investors to participate through the DSE platform.

The bond, issued by development organisation Sajida Foundation, received approval from the Bangladesh Securities and Exchange Commission in March this year to raise Tk158.5 crore through private placement.

Designed as a social impact financing instrument, the zero-coupon bond aims to fund women-focused economic empowerment initiatives and expand access to inclusive financing.

According to the DSE, Tk75.73 crore of the total bond value has been allocated for eligible investors through the subscription process.

Speaking at the signing ceremony held at the DSE headquarters, Managing Director Nuzhat Anwar said innovative and inclusive financing structures are essential for leveraging Bangladesh's demographic dividend.

She said thematic instruments such as orange bonds are opening new avenues for alternative financing in the capital market.

BRAC EPL Investments Chief Executive Officer Syed Rashed Hossain said the Sajida Orange Bond is laying the groundwork for an internationally aligned thematic bond market in Bangladesh.

He said the initiative would help create a strong impact investment platform capable of attracting both local and foreign investors by combining financial returns with measurable social impact.

He also expressed hope that the successful launch of the bond through the DSE platform would encourage more thematic bond issuances in the future.

Deputy CEO of Sajida Foundation Md Fazlul Hoque, described the Orange Zero-Coupon Bond as a significant initiative for women's empowerment.

He said Sajida Foundation has been working for over 30 years to support women through employment generation, income enhancement and financial inclusion programmes.

Under the allocation plan, around 32% of the raised funds will be used for SME financing and employment generation, 20% for housing-related initiatives, and nearly 40% for agriculture and food security projects.

The remaining funds will support microfinance operations, programme implementation and technology-driven financial inclusion initiatives.

Senior officials from DSE, Sajida Foundation and BRAC EPL Investments were present at the signing ceremony.

The Dhaka Stock Exchange has announced an updated schedule for its office and trading operations in line with the government-declared Eid-ul-Adha holiday period.

According to the announcement, the DSE will continue its regular office and trading activities on Saturday, 23 May and Sunday, 24 May following normal trading hours.

The exchange will then remain closed from 25 to 31 May due to the official Eid-ul-Adha holidays.

Normal trading and office operations will resume on 1 June.