Brokers association urges central bank to include bond defaulter data in CIB

The DSE Brokers Association of Bangladesh (DBA) has
formally requested Bangladesh Bank to include bond defaulters' information in
its Credit Information Bureau (CIB) database.
The association highlighted that no regulatory body
currently maintains a formal record of bond defaults, creating a significant
information gap that exposes investors to financial risks and fosters a culture
of non-repayment within the fixed-income market.
The proposal was placed during a high-level meeting between
a DBA delegation, led by its President Saiful Islam, and the Bangladesh Bank
Governor yesterday. Discussions focused on the capital market's current state,
challenges within the banking sector, and long-term reforms needed to restore
investor confidence.
Saiful Islam pointed out that while bank loan defaulters
are strictly monitored through the CIB, bond issuers who fail to honour
repayment obligations often escape such scrutiny. Integrating this data into
the CIB, the DBA argued, would boost transparency and accountability across the
financial sector, curbing corporate issuers' tendency to default on debt
securities.
Beyond bond defaults, the DBA submitted a comprehensive set
of policy recommendations aimed at building a more resilient financial
ecosystem. A key concern was the repeated recapitalisation of troubled banks
using taxpayer money, which the association argued is fiscally unsustainable.
It instead recommended restructuring distressed lenders through market-based
investment, mergers, and private sector participation.
The brokers also emphasised the need to reduce the banking
sector's over-reliance on large corporate borrowers. The DBA suggested that big
corporate houses should be mandated to raise a portion of their capital through
the stock market via bonds and equity. This shift would not only deepen the
capital market but also diversify the risks currently concentrated within the
banking system.
To improve market liquidity, the DBA proposed expanding
access for general investors and non-primary dealer banks to government
securities through non-competitive bids. It also called for a shift from the
current T+2 share settlement cycle to T+1, arguing that faster settlement would
reduce transaction risks, accelerate fund reinvestment, and align the Dhaka
bourse with international standards. T+1 settlement or Transaction plus one day
means that when you buy or sell a security (such as a stock or bond), the trade
is finalized—meaning the buyer gets the asset and the seller gets the
cash—exactly one business day after the trade is executed
On fiscal matters, the association noted that existing tax
laws impose an added burden on retained earnings and stock dividends,
discouraging banks and financial institutions from strengthening their capital
bases. It urged greater coordination between Bangladesh Bank and the National
Board of Revenue to address these inconsistencies.
Other proposals included launching an integrated local
digital payment system to reduce dependency on international gateways and lower
transaction costs, and raising the investment ceiling for banks in open-end
mutual funds to boost institutional participation.
















