A special policy to allow each bank to build a Tk200 crore fund for capital market investment beyond their regular exposure limit was formed as per the directives of the prime minister
Dhaka Stock Exchange (DSE) Director Rakibur Rahman on Saturday called for sincere participation of banks in the plan to support the ailing capital market.
"The market is falling because of fear among investors and bank directors can play a significant role to boost market confidence," Rahman, former president of the premier bourse, told reporters.
"Bank directors can buy shares of their own companies, most of which are around face value now," said Rahman, adding that the price of those shares "were 10 to 20 times higher in the bull market a decade ago."
Issuing stock dividends year after year and continuously diluting the company earnings and assets is a significant reason behind the current low pricing of banking stocks, the DSE director opined.
"Many bank directors once sold shares at very high prices, which they should recollect from the market right now at a much lower price for the sake of the market and general investors."
If five sponsors and directors from each bank declare a share purchase plan, the market will get a boost, Rahman hoped.
The DSE director also said banks should sincerely participate in the special investment opportunity in the capital market as prescribed by the central bank a month ago.
"The special policy to allow each bank to build a Tk200 crore fund for capital market investment beyond their regular exposure limit was formed as per the will of Prime Minister Sheikh Hasina," said Rahman.
However he expressed his frustration over the fact that the banking industry high-ups have not yet held any meeting to discuss the matter.
"All over the world, the collective effort of all stakeholders help revive market confidence during crises, and it is possible in our market too," said the market veteran.
Share buy-back programmes by listed companies is a significant way to reduce supply, increase demand and boost investors' confidence across the globe and Bangladesh needs it badly, said Rahman.
The stock market in Bangladesh is suffering from a serious downturn that is pushing the indices below the level they were in 2015.
"Since the market crash in 2010-11, we are speaking for formal buy-back programmes, but we are yet to get a legal framework for that," Rahman added.
If all of us act responsibly to support the market, we will see the market performing well again, he said.