Objectives of the Report:
I. Broad Objective:
Broad objective of our report is find the weak regulatory framework, supply-side constraints such as a lack of the benchmark bonds, demand-side constraints such as the limited investor base, a lack of intermediaries with expertise in debt products, a lack of confidence in corporate borrowers, market distortions which are caused by the National Savings Scheme (NSS) offering above-market returns; and A lack of interest from private companies, including financial intermediaries and large business, In launching new debt products due to high fees. We have mainly tried to use our bookish knowledge practically. We have also looked for any further development of the Bond Market in Bangladesh in future which is in need. Finally, the paper offers a roadmap for the development of the Bangladesh bond market.
To contribute to develop an effective bond in Bangladesh.
If we analyze of the Bond Market, it will increase our knowledge about finance Market. In future we will be able to analyze the financial statements of any Market.
II. Specific Objective:
To get an overview and specific features of bond market in Bangladesh. To identify the impediments/ constraints and to tackle the problems in order to enhance the development of bond market and to make recommendations for the developments of the bond market. And also by comparing the bookish knowledge and practical knowledge.
The bond market is a financial market where participants buy and sell debt securities, usually in the form of bonds. Bond Market is composed of Treasury bond, Municipal Bond and Corporate Bond. This is of two kinds- Organized and OTC markets. There are various types of bond products depending on provisions, maturities, coupon rate, options, convertibility, etc. Bond Market in Bangladesh is dominated by treasury debt securities. It has now only one corporate bond; but does not have any municipal bond/debenture. In recent years, around 70 percent of the domestic savings are held in the form of bank deposits, while only 30 percent are investments in the debt market which is entirely dominated by government instruments. There hardly exists a corporate bond market in the country; it has a debenture market with only a small number of well-known issuers. As of today, only one corporate bond has been floated. Money Market is an integral part of the financial market of a country. It provides a medium for the redistribution of short term loan-able funds among financial institutions, which perform this function by selling these short term securities that usually are highly marketable. The money market in Bangladesh is in its transitional stage. The various constituent parts of it are in the process of formation, while continuous efforts are being made to develop appropriate and adequate instruments to be traded in the market. At present Money market instruments such as Government treasury bills of varying maturity, Bangladesh Bank Bills, Certificates of Deposits, Bankers Acceptance or L/C and Repo and Reverse etc in limited supply are available for trading in the market. However, the short-term credit market of the banking sector experienced a tremendous growth since in recent years, a total of about 6000 branches of the scheduled banks provided short-term credit throughout the country in the form of cash credit, overdraft and demand loan. The paper first analyzes the current situation of the bond markets in Bangladesh: The bond market has played a limited role in the Bangladesh economy. The Bangladesh bond market is also rather shallow compared to the neighboring countries. Then, the paper analyzes the main impediments to the Bangladesh debt market include (I) the weak regulatory framework; (ii) supply-side constraints such as a lack of the benchmark bonds; (iii) demand-side constraints such as the limited investor base; (iv) a lack of intermediaries with expertise in debt...
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