Dhaka: Finance Adviser Salehuddin Ahmed today emphasized the urgent need for Bangladesh to reduce its reliance on bank debt and instead utilize a more robust capital market to meet financial requirements. He argued that the current funding model, which heavily depends on bank loans, often leads to defaults. “Private sector participation in bonds is very poor. To meet financial needs, we must raise funds from the capital market rather than through loans,” he stated.
According to Bangladesh Sangbad Sangstha, Salehuddin made these remarks at a seminar titled “Unlocking Bangladesh’s Bond and Sukuk Markets: Fiscal Space, Infrastructure Delivery and Islamic Money Market Development.” The event was jointly organized by the Bangladesh Securities and Exchange Commission (BSEC) and the Dhaka Stock Exchange (DSE) and was held at the DSE Tower in the city. Salehuddin urged for greater financial literacy and a long-term investment culture, suggesting that the capital market should not be perceived as a venue for indefinite profit-making.
Addressing the issue of sukuk, he pointed out that these instruments need to be supported by real, financially viable assets rather than fragile ones like derivatives. Salehuddin also highlighted the complexities surrounding pension fund management, noting that these funds are public resources under government control. He questioned how the government would meet its obligations if the entire fund was invested when people needed the money.
During the seminar, Bangladesh Bank Governor Ahsan H Mansur stated that a joint task force comprising the central bank and BSEC has been actively working on bond market development and has provided specific recommendations to the government. He noted that globally, $130 trillion worth of bonds have been issued, positioning it as the largest financial market.
Mansur further explained that while banks can offer loans for a duration of five to six years, they are not suited for loans exceeding ten years. He advocated for long-term assets to be financed through bonds and suggested that even saving certificates should be tradable in the secondary market. Additionally, he called for reforms in the pension system to guarantee its sustainability through long-term investments.