The Securities and Exchange Commission on Tuesday approved a guideline for stockbrokers and merchant bankers to waive 50 per cent of the interests on the past year’s margin loans for the small-scale investors who suffered in the 2011 stock market crash.
The commission also approved a list of the affected investors who will be entitled to apply for a 20-per cent IPO quota under a government announced compensation scheme, said SEC officials.
The approval came at a meeting presided over by SEC chairman M Khairul Hossain at the commission’s board room.
‘In the guideline, the commission has detailed the process how the brokerage houses and the merchant bankers will implement the compensation scheme,’ a senior SEC official told New Age on Tuesday.  
He said that the processes of margin loan interest waiver and IPO quota allotment were specified in the guideline.
Finance minister Abul Maal Abdul Muhith on March 4 announced that 50 per cent of the past year’s margin loan interest will be waived and a 20-per cent quota in IPOs will be allotted for the affected small-scale investors.
The announcement was followed up two days later by an order from the finance ministry to the merchant banks and the brokerage firms.
The order said those who invested less than Tk 10 lakh and had a beneficiary owners’ account in between January 2009 and November 2011 would be ‘eligible’ for the interest waiver.
Market insiders said the merchant banks and the brokerage houses were taking advantage of the government announcement as the government, in its order, did not make such waiver mandatory.
No merchant bank or brokerage house, except state-run Investment Corporation of Bangladesh, waived interests on margin loans given to its clients after two months from the government’s order on the matter.
Of the total interests, Tk 70.35 crore margin loan interests were incurred at 31 merchant banks while Tk 59.85 crore at 27 brokerage firms, the compensation committee data showed.
So far, only the ICB board in late March decided to waive interest of Tk 7.24 crore for its 7,584 investors.  
After a free-fall in share prices in 2011, prime minister Sheikh Hasina in November last year asked the SEC to work out a package to minimise the losses incurred by investors in the crash.
The commission, in line with the prime minister’s order, announced first a stock market stimulus package containing short-, mid-, and long-term measures and then formed a six-member committee to recommend a compensation scheme.
The committee, headed by ICB managing director Mohammad Fayekuzzaman, put forward a proposal on compensation in late January this year. The proposal was the basis of the finance minister’s March 4 announcement.
The SEC at the meeting on Tuesday also approved the amendments to the corporate governance guideline, making it mandatory for the listed companies. Earlier, the guideline was voluntary in nature.
Under the amended guideline, of the total board members, one-fourth
must be the independent directors.