Banks' investments to the country's capital market under Bangladesh Bank's special refinance scheme   remains very poor even after six months of its launching on February 10 this year eventually defeating its very purpose.   

Banks are apparently giving lukewarm support to the initiative at a time when investment made by 16 banks so far stands at Tk 264 crore.  All banks were asked to set up Tk 2.0 billion fund each to contribute to a capital market investment fund of Tk 100 billion. But most banks are still lagging behind.   

The central bank offered the refinance opportunity for the fund hoping that banks would grab the facility by making investment in the stocks to give some momentum to the ailing market which suffered heavily for more than one year.
The capital market is bouncing back at the moment but banks still remained reluctant as fear of uncertainty still haunts them. "Their response not satisfactory," a BB official said.
United International University professor Mohammad Musa explaining the situation told The Daily Observer, that 'banks are not yet quite confident about the market.'
The banks had predicted further fall in the share prices due to prolong bearish trend but the situation has turned bullish in the last one month when prices of many stocks increased. Banks now think it is not safe to put money in a rising market, Musa pointed out.  
'If the banks invest now, they will have to face questions from their shareholders for not investing several months ago when stocks were cheaper.' It will take time for the current leadership to win investors confidence. 'It's tough to predict anything about Bangladesh stock market,' he said.
Central bank sources said 16 banks which have set up the funds include four state owned banks.                        Sonali Bank, Janata Bank, Agrani Bank, One Bank, Mercantile Bank, United Commercial Bank and NCC Bank have formed Tk 200 crore special fund each. Pubali and City Bank have formed Tk 50 crore fund each. EXIM Bank has set up a fund of Tk 80 crore.

The fund would remain valid for 5 years till 2025.  The central bank would lend fund to the banks under the refinancing scheme against sales of treasury bills or bonds banks held at a rate of 5 per cent interest.
Dhaka Stock Exchange lost 1900 core index in 11 consecutive months causing major headache to the government. The central bank then came up to set up the special fund to expedite banks investment in the stocks.
Though the market was bullish for several weeks after the BB's move, but it dived again to prolonged depression after the outbreak of coronavirus in the country. In the last one month, the DSEX gained more than 600 points as investors returned to the floor with renewed hope.  

But banks are yet to make a strong come back, the market sources said.