Wednesday, 10 November 2010

Jatiya Sangshad body says to stop margin loan in DSE

The parliamentary standing committee on finance voiced Tuesday its concern over "overheated" stock market and asked the securities regulator to take steps to stop margin loan facility.

Investors are entitled to 1:1 margin loan facility but under the new margin maintenance formula they do not get more than 50 per cent of their equity.

The committee also asked the Securities and Exchange Commission (SEC) to initiate an investigation to identify the manipulators, who allegedly twist prices at the cost of small investors.

The government is going to amend Value Added Tax Act, 1991 and it will be introduced by next fiscal and the NBR is also working on Income Tax Act, said committee chairman AHM Mostafa Kamal Tuesday.

Mr Kamal said a "vested group" is active in the market and it is trying to reduce stock prices of listed state-owned enterprises, when the government has decided to offload their shares.

"We asked the SEC to detect manipulators before shares of state firms hit the market," he said after a standing committee meeting.Mr Kamal said share prices of companies with small capital base are mostly manipulated and the committee found "the behaviour of the market to be abnormal."
The meeting, attended by finance minister AMA Muhith, dwelt on the capital market and performance of NBR in the first quarter of the current fiscal.Mr Kamal said the Jatiya Sangshad (JS) committee was of the view that the market is flush with massive liquidity and the SEC should rethink the margin loan facility.

"It should ask the brokerage houses not to provide any margin loan to squeeze the supply of liquidity in the market," he said.

The committee chairman said the capital market is not being used for productive purposes and new companies should be given incentive to raise funds from the stock market.

The standing committee also asked the government to revisit the tax-holiday scheme and provide newly listed companies with the rebate facility for a certain period, Mr Kamal said.

The committee recommended that 'tax-holiday' scheme should be used as an incentive for floating initial public offering of non-listed business houses.

There should be a continuous awareness programme to educate investors so that they can make intelligent investment, he said, adding, "We also asked DSE and CSE to publish all its publications in Bengali so that most of the investors can read it."

In the first quarter of the current fiscal, he said income tax achieved 25 per cent growth, VAT 33 per cent while import duty 19 per cent growth rate, Mr Kamal said adding, "It is a good performance."The government is going to table VAT Act amendment before the parliament and it will be introduced from the next fiscal.
"There is a growing need to simplify income tax laws and the NBR is working in this regard," he said, adding, "One page tax return has been introduced for small businessmen."

NBR will also introduce one-stop service from the next fiscal and it will continue its endeavour to boost revenue collection, Mr Kamal said.

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