Role of Icb in Bangladesh Essay Example
Role of Icb in Bangladesh Essay Example

Role of Icb in Bangladesh Essay Example

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  • Pages: 5 (1105 words)
  • Published: January 4, 2017
  • Type: Research Paper
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The capital market is the engine of growth for an economy, and performs a critical role in acting as an intermediary between savers and companies seeking additional financing for business expansion. Capital market means the market, or realistically, the group of interrelated markets, in which capital in financial form is lent or borrowed for medium and long term and, in cases such as equities, for unspecified periods. A capital market is a market for securities (debt or equity), where business enterprises (companies) and governments can raise long-term funds.

It is defined as a market in which money is provided for periods longer than a year, as the raising of short-term funds takes place on other markets (e. g. , the money market). The capital market includes the stock market (equity securities) and the bond market (debt). Money market and capital markets are par


ts of financial markets. Capital markets may be classified as primary markets and secondary markets. In primary markets, new stock and bond issues are sold to investors via a mechanism known as underwriting.

In the secondary markets, existing securities are sold and bought among investors or traders, usually on a securities exchange, over-the counter, or elsewhere. Industry and commerce as well as government and local authorities raise capital from the capital market which performs several important functions in the process of economic development. Most important among them are the promotion of savings and investment and efficient allocation of funds among competing uses.

Participants in the capital markets are many. They include the commercial banks, savings and loan associations, credit unions, mutual saving banks, finance houses, finance companies, merchan

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bankers, discount houses, venture capital companies, leasing companies, investment clubs, pension funds, stock exchanges, security companies, underwriters, portfolio-managers, and insurance companies. If we want to evaluate the country’s capital market, the role of investment Corporation of Bangladesh cannot be ignored.

The Investment Corporation of Bangladesh (ICB) was established on 1 October 1976, under “ The Investment Corporation of Bangladesh Ordinance 1976”. The establishment of ICB was a major step. To encourage and broaden the base of investments and also to develop the capital market is one of the major objectives. There are different types of business policy which are provided by ICB. To provide financial assistance to projects subject of their economic and commercial viability. Adoption and application of corporate governance principles and guideline receive unremitting attention of ICB.

The fundamental features of corporate governance standards exercised by ICB are among others, Peruse ethical norms in all operations ensure full disclosure and greater transparency in financial statements, generate reliability and trust our thickness in business transactions optimize the quality of services to clients and safe guard the interest of the shareholders and others stakeholders. Now ICB is working to meet the objectives- * To encourage and broaden the base of investments.

Investment Corporation of Bangladesh, since its inception, plays various roles in implementing some decisions that have national priority and in the same way it continues to remain as a catalyst in achieving the economic objective of the country. It introduces new products and services, targets growth sectors, and aligns its business strategies with implementation and achievements. From the beginning ICB remains engaged with identifying the internal and external factors that are

favorable for achieving its objectives and this enables the organization to grow and gain strength.

As a part of restructuring program of ICB under capital market development program (CMDP) initiated by the Govt. of Bangladesh (GOB) and the Asian development bank (ADB) and in terms of powered conferred upon in the ICB ordinance, three subsidiary companies, namely

  1.  ICB capital management Limited;
  2.  ICB securities Trading company Limited; and
  3. ICB asset management company Limited have been formed and made operational to carry out merchant banking, stock brokerage functions and mutual fund operations respectively.

After the issuance of the Govt. gazette otifications, ICB Capital management Limited and ICB Asset management Company Limited commenced their functions from 1 July 2002 and ) ICB securities Trading company Limited from 13 August 2002. The subsidiary companies are operated by their own memorandum and articles of association, Companies act, 1994, SEC’s rules and regulations and other applicable laws.

The companies have independent Boards of Directors and separate management. 2. Statement of the problem In spite of having a number of activities the financial position of investment Corporation of Bangladesh in respect of its financial assistance operations hs not improved ignificantly over the last three decades. Although, to solve these crisis, the authorities have taken some important measures and yet, the performance of said operations could not be improved to the expected level. By innovating new opportunities the ICB can enhance its activities as well can improve the condition of capital market of Bangladesh.

A comprehensive study is needed to evaluate the performance of ICB. The dynamics of capital market is changing gradually.

To adapt this changing environment it is needed to adapt new policies and activities. In this regard an in depth study is eeded to update the activities of ICB. Proper dissemination of research-based information is also absent in the capital market sector. A lack of capital market friendly policies, fluctuation in foreign currencies, fluctuation of bank rates, a shortage of information on trading and many other issues are hindering the development of capital market. So, to overcome these problem research based data is necessary. Moreover, recent changes in world economy and, price hike are affecting the development of capital market and for these reasons ICB may face some challenges in the coming years.

Review of Literature Review of literature is a source of knowledge and provides a deep understanding about the topic or the issue closely related to the study to be undertaken. It also finds knowledge gap and justify the proposed research. In view of doing so, the researcher will go through various relevant books, journals, web sites, and research reports for finding research gap and making a new contribution in the existing knowledge as well as relevant understanding about the study. 4. Justification of the study One of the major investment banks in Bangladesh, the Investment Corporation of

Bangladesh (ICB), plays a vital and leading role in developing the capital market. It has a taken number of initiatives for the development of the capital market. 36 years have passed since its inception. So, it is a crying need to evaluate its performance of ICB. It appears that studies so far done on this issue in Bangladesh are limited. In this perspective

this study will be a pioneer work in this field. It will be able to examine the role of Investment Corporation of Bangladesh in capital market development. For this reason the researcher has chosen this field of study.

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