DSE Brokers' Association (DBA), a platform of the Dhaka Stock Exchange's (DSE) stockbrokers, has requested the government to allow undisclosed money into the capital market for three years.
The association in its letter to Finance Minister AHM Mustafa Kamal on Tuesday said if the government allowed undisclosed money into the capital market, it would help the market revive.
It recommends a policy to channelise half of the black money into stocks and the remaining half into exchange-traded bonds.
The utilisation of the money, which is already out of the state's reach, can serve the economy if a three-year lock-in period is imposed, a board member of the DBA told The Business Standard.
The government is in need of money to finance the gigantic post-pandemic national budget. Experts are suggesting the government to borrow money through treasury bonds in the coming days.
Meanwhile, the securities regulator, Bangladesh Bank and the DSE in a coordinated effort have already come up with an action plan to bring life to the secondary market for treasury bonds and bills.
A committee consisting representatives of each of the three offices has recommended mandatory listing of each of the treasury bonds and bills to be issued.
"If the black money is allowed according to our prescription, both the government and private sector businesses will be benefited through bond financing," said one of the brokerage leaders preferring anonymity.
The proposed channelisation of undisclosed money has long been a controversial topic. Some economists believe that through the process a state inspires stockpiling of undisclosed wealth, which is earned in most of the cases illegally.
On the other hand, supporters of pragmatic economic policies say the money is already black and beyond the reach of the state. So, bringing that money back into the formal economy is rewarding when the government and capital markets are hungry for funding.
"The unpleasant reality is that if we remain stringent, the undisclosed wealth of some of our people will be parked into any safe haven abroad today or tomorrow and the country will lose all sorts of grip on it forever," said the brokerage leader.
He believes that it is possible to channelise black money equivalent to at least one-third of the current capitalisation of the stock market if there is a reliable assurance of not questioning the investors about the sources of money in future.
The association has also sought a soft loan scheme for stock brokers so that they can manage working capital for the next 12 months. They have sought the concessional loan at three per cent interest rate, which can be paid in 24 monthly installments over 2021 and 2022.
The DBA reiterated its request to bring the advance income tax on securities transactions down at 0.015 per cent from the existing 0.05 per cent. The association also demanded a waiver of brokers' depository fees and the annual charges for one year.
As the margin accounts of thousands of investors are at risk, DBA also requested fresh funding for them with a 3 per cent interest rate for three years so that they can stay afloat in the market.
Besides, if the payable interest against margin loans is waived for one year, the losing investors will get relief and be able to participate in the market activities again, thinks the association.
The bearish trend in the stock market is being continued for a long time despite the steady growth of the country's economy.