The Bangladesh Securities and Exchange Commission (BSEC) has proposed stricter rules for margin loans, aiming to prevent excessive borrowing that has long destabilized the stock market. According to the draft amendment, only investors with at least Tk 5 lakh investment, one year of trading experience, and a regular income will qualify for margin loans. Those with less than Tk 10 lakh invested can borrow up to half their portfolio value, while larger investors may borrow an amount equal to their holdings.
Read More: Syngenta Launches First Insect Resistance Management Facility in Bangladesh
The amendment also caps margin lending at Tk 10 crore or 15 percent of a firm’s net worth, and prohibits loans for B and Z category shares, newly listed firms within 90 trading days, and companies with a P/E ratio above 30. Investors must disclose all existing loans, and firms must comply with capital adequacy requirements and set up risk management committees.
Market experts welcomed the move, recalling that margin loan abuse fueled the 2010 bubble and left negative equity exceeding Tk 15,000 crore after the 2011–12 crash, now reduced to about Tk 9,700 crore. While some warn that reduced liquidity may hit small investors, regulators believe the reforms will build a healthier, more sustainable market in the long run.