The Bangladesh Securities and Exchange Commission (BSEC) has taken an initiative to return funds that were raised through debentures about 30 years ago, totalling around Tk 150 crore.
Debentures are debt instruments issued by companies in order to raise fund for a certain period of time, most often for 10 years. During this period, investors who purchased a debenture will receive interest against their investment.
Eight debentures — Bangladesh Luggage Industries, Bangladesh Zipper Industries, Beximco Knitting, Beximco Fisheries, Beximco Textiles, Beximco Denim, Aramit Cement and BD Welding Electrodes — were listed with the Dhaka Stock Exchange (DSE) back in the 1990s.
And although their tenures ended in between 2002 and 2008, the issuers did not repay the capital raised through investors.
Unlike previous commissions though, the newly appointed commission, led by Professor Shibli Rubayet Ul Islam, has taken measures to return this money.
The debentures will be paid back in phases with two companies returning the funds each phase. Of the eight companies, two will have their 14 per cent debentures delisted after the money is returned to investors, according to the DSE.
The two companies — Bangladesh Luggage Industries and Bangladesh Zipper Industries — are both concerns of Doel Group.
“All funds raised from debentures are bound to return to their investors,” said a senior official of the BSEC seeking anonymity.
“We want to restore discipline in the market and returning this money is a move in the right direction as it will boost investors’ confidence as well,” he added.
This initiative is investor friendly as they will get back the money they thought was lost for good, said Abdullah Hassan, a stock investor.
The eight listed bonds had raised about Tk 157 crore from the market, as per DSE data.
When a commission traces any irregularity and takes steps to resolve them, then it boosts investor confidence and stock prices start going upwards, he added.
The DSEX, the benchmark index of the DSE, rose by 1,130 points, or 28 per cent, over the past three months.
The debenture market has been spoilt by these eight issuers that failed to return their borrowed funds, said a top official of a merchant bank preferring anonymity.
“Our investors are refraining from investing in new products after experiencing the bitter taste of these debentures. But the latest move by the stock market regulator will boost investor confidence,” he said.