Businesses urged to rely less on bank loans

Bangladesh needs to bring more companies to the stock market and diversify corporate financing beyond bank loans to build a more balanced and resilient financial system, speakers said at a capital market conclave in Dhaka yesterday.

Speaking at the IDLC Capital Market Conclave 2026 at Renaissance Dhaka Gulshan Hotel yesterday, they also called for encouraging financially sound companies to raise funds through initial public offerings (IPOs), direct listings and bonds, while strengthening corporate governance and investor confidence.

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“We want companies to enter the capital market voluntarily, without being compelled to do so, and benefit from it,” said Masud Khan, chairman of the Bangladesh Securities and Exchange Commission (BSEC).

The BSEC has already held direct discussions with several domestic, foreign and multinational companies, he said, urging private-sector entrepreneurs to give serious consideration to listing on the stock market.

Mesbah Uddin Ahmed, managing director of IDLC Investments Ltd., said companies in Bangladesh rely on bank borrowing for around 75 percent of their financing, compared with about 53 percent in India and 15-20 percent in more developed markets.

Bangladesh also has the lowest market capitalisation among neighbouring countries, underscoring the need to develop alternative sources of corporate financing.

“We are not saying that dependence on banks is bad. However, we need to work towards building a more resilient and balanced financial structure,” he said.

Mominul Islam, chairman of the Dhaka Stock Exchange (DSE), said the country’s market capitalisation was below 8 percent of gross domestic product, and the exchange aimed to raise the ratio to 20 percent by 2030.

Including bonds and government securities, the market could grow from the current equity market value of around $30 billion to more than $200 billion, he said.

“This is certainly achievable when compared with other Asian countries. However, it will require the active participation, confidence and trust of all stakeholders,” he added.

In his welcome address, M Jamal Uddin, chairman of IDLC Investments, said the financing needs of banks and financial institutions were rising alongside economic growth, making alternative sources of funding increasingly important.

A more effective capital market could provide long-term financing for businesses and ease mounting financing pressures on banks, he said.

Kazi Mahmood Sattar, chairman of IDLC Finance, said poor mutual fund management practices had undermined the confidence of savers who might otherwise invest in the stock market.

In many countries, savers rely on mutual funds when they lack the knowledge or confidence to invest directly in capital markets. In Bangladesh, however, they tend to prefer bank fixed deposits, even though deposit rates have fallen to single digits, he said.