Md Rakibur Rahman requested the government to withdraw lock-in mechanism on whitening money in the capital market
Veteran stock broker and Dhaka Stock Exchange (DSE) Director Md Rakibur Rahman has urged the government to withdraw the three-year lock-in mechanism on investing undisclosed money in the capital market.
Withdrawing the mechanism means that if one wants to invest black money in stocks, he or she can do it just by whitening the cash through taxation, averting the complexity of the proposed lock-in period.
Referring to previous experience, he commented that no investor will take the opportunity otherwise.
Previously, the government had allowed black money in the stock market in the 1997-98 and 2010-11 fiscal years. The last money-whitening facility failed to draw the desired response from investors even with a two-year lock-in period.
Rakibur said the government should declare no lock-in this time considering the reality.
Capital market stakeholders had been requesting the government to allow black money in stocks with a mere whitening tax and a lock-in for three years so that the sinking market gets a lifeline.
In the proposed budget for the next fiscal year, the government declared exactly what the market groups wanted from the Ministry of Finance.
But the budget also proposed money whitening scopes for other sectors including real estate and bank deposit and savings schemes without any lock-in mechanisms.
Rakibur, who was also the president of the country's premier bourse, in a press release supported the government's decision to bring in undisclosed money to the formal economy.
He said that as other scopes to whiten black money stipulate no conditions over investment duration, rules regarding whitening money should also be the same for the capital market.
Meanwhile, the Dhaka bourse in an online meeting with the Bangladesh Securities and Exchange Commission on Tuesday, has demanded for the tax rate set in the proposed budget for whitening black money in the stock market to be reduced from 10 percent to a single-digit figure.
The Bangladesh Merchant Bankers Association on Sunday requested the finance ministry to reconsider the idea of lock-in.