Disbursement of $150 million Asian Development Bank (ADB) loans for the development of country’s capital market is facing uncertainty as most of the concerned organisations failed to meet conditions imposed by the lender.

Earlier on September 26, the Economic Relation Department (ERD) directed Insurance Development Regulatory Authority (IDRA) to take necessary measures to meet conditions by September 30 to get the first tranche of the loans.

It also said warned the IDRA that failure to fulfill the lender’s conditions would create hindrance to disbursement of the loans.

The ADB agreed to provide Tk 300 million (Tk 24 billion) loans for the 2nd Capital Market Development Programme (CMDP-2) to be implemented under supervision the Banking and Financial Institute Division of the Finance Ministry.

This first tranche of the fund, which is scheduled to be disbursed in two phases on condition of implementing 28 terms, was supposed to be disbursed by September 30, 2012.

To strengthen the insurance sector, the government agreed to fulfill the conditions within the stipulated time for recapitalising all the insurance companies in accordance with Insurance Act, 2010 and adopting investment regulations as required by section 41 of the Insurance Act, 2010.

The conditions are formation of an advisory committee, a central ratings committee, a dispute resolution committee, management of IDRA fund, appointment of CEO, fees for registration rules, obligations of insurers to rural and social sectors, fees for licensing branches and offices of insurers, application for grant of license.

The conditions include demutualisation of stock market, reducing bank risk exposure and margin loan rate of merchant banks, and formation of national capital market within 15 months.

The ADB also recommended forming a steering committee to look after execution of the conditions.

Earlier, the ADB set twenty-eight conditions for disbursement of $300 million loans for implementation of the second phase of the CDMP.

IDRA chairman, could not be reached despite sever attempts over cell phone for his comments on failure to implement the conditions.

News: The Daily Sun/Bangladesh/9th-Oct-12