Bangladesh : Third Capital Market Development Program
The objective of the Third Capital Market Development Program (CMDP3) is the enhanced capacity and size of the capital market that is grounded on a strong legal and regulatory framework.
Project Details
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Project Officer
Janardanam, Srinivasan
South Asia Department
Request for information -
Country/Economy
Bangladesh -
Modality
-
Sector
- Finance
Related Projects
Project Name | Third Capital Market Development Program | ||||||||||||||
Project Number | 45253-002 | ||||||||||||||
Country / Economy | Bangladesh |
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Project Status | Closed | ||||||||||||||
Project Type / Modality of Assistance | Loan Technical Assistance |
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Source of Funding / Amount |
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Operational Priorities | OP6: Strengthening governance and institutional capacity |
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Sector / Subsector | Finance / |
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Gender | No gender elements | ||||||||||||||
Description | The objective of the Third Capital Market Development Program (CMDP3) is the enhanced capacity and size of the capital market that is grounded on a strong legal and regulatory framework. | ||||||||||||||
Project Rationale and Linkage to Country/Regional Strategy | ADB''s focus area in its Bangladesh public sector operations is capital and bond market development, focusing on the provision of long-term infrastructure. This is in line with the government's Sixth Five-Year Plan and the Midterm Review of ADB's Strategy 2020 priorities. The project was envisaged to support the government's Vision 2021. Vision 2021 laid out a roadmap for Bangladesh to attain middle-income status and set target gross domestic product (GDP) annual growth of 10% by FY2021. To attain GDP growth targets and sustainable economic growth, Bangladesh should address structural deficiencies in the capital markets by deregulating the financial system to support the real economy and promoting private sector investment to reduce the infrastructure deficit. CMDP3 builds on the progress of the Second Capital Market Development Program (CMDP2) in 2012. The CMDP2 was aimed at stabilizing the market since the stock market debacle in December 2010 and bringing about reforms that set the foundation for sustainable market development through the passages of critical legislations, such as amendment to the Securities and Exchange Commission Act, 1993, as well as the enactment of the Demutualization Act, 2013, and the Financial Reporting Act, 2015. Despite the major stride toward strengthening its capital markets, there remained constraints. The government and ADB agreed to deepen and broaden the outreach of the second program reforms through the CMDP3. Against this background, the CMDP3 was designed to support several structural reforms, which includes (i) strengthening enforcement capacity of Bangladesh Securities and Exchange Commission (BSEC) and Insurance Development and Regulatory Authority (IDRA) , (ii) ensuring quality financial reporting by public companies as per international standard, (iii) facilitating demutualization of the two stock exchanges, (iv) facilitating recapitalization of intermediaries, (v) developing market infrastructure, (vi) introducing new regulations for Sukuk (Sharia-compliant bonds) and derivatives, (vii) developing mutual fund and private equity/venture capital industry, and (viii) developing more liquid government securities market. |
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Impact | A well-functioning financial system that supports basic capital and investment needs, as well as Bangladesh''s longer term economic objectives. |
Project Outcome | |
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Description of Outcome | Enhanced capacity and size of the capital market in a strong legal and regulatory framework |
Progress Toward Outcome | Two of the three outcome indicators have been achieved as of January 2020, specifically, (i) enlistment of 570 new securities and (ii) total value of corporate bonds issued increases to Tk 19 billion. |
Implementation Progress | |
Description of Project Outputs | Strengthened market stability Enhanced market facilitation Enhanced supply measures Enhanced demand measures |
Status of Implementation Progress (Outputs, Activities, and Issues) | The loan is provided in two tranches. Upon loan effectiveness on December 2015, the first tranche, was released and 8 policy actions were completed. The second tranche was released on March 2020. Of the 18 policy actions, 17 were fully complied with. |
Geographical Location | Nation-wide |
Safeguard Categories | |
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Environment | C |
Involuntary Resettlement | C |
Indigenous Peoples | C |
Summary of Environmental and Social Aspects | |
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Environmental Aspects | The capital market reforms under the program are likely to have no adverse environmental impacts. |
Involuntary Resettlement | The program has no involuntary resettlement impacts. |
Indigenous Peoples | The program has no impact on indigenous peoples. |
Stakeholder Communication, Participation, and Consultation | |
During Project Design | |
During Project Implementation | ADB has been consulting public and private stakeholders in capital markets on a regular basis to effectively implement the program. |
Business Opportunities | |
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Consulting Services | ADB recruited a consulting firm to provide 17 person-months of international and 8 person-months of national consulting services for (i) installing and operationalizing BSEC new ICT system, (ii) drafting rules for derivatives by BSEC, (iii) facilitating establishment of a clearing and settlement company, (iv) drafting regulations for issuance of Sukuks by BSEC and (v) provide trainings to IDRA. During the TA implementation, all the disbursements under the TA will be made in accordance with ADBs Technical Assistance Disbursement Handbook (2010, as amended from time to time). |
Procurement | not applicable |
Responsible ADB Officer | Janardanam, Srinivasan |
Responsible ADB Department | South Asia Department |
Responsible ADB Division | Public Management, Financial Sector and Trade Division, SARD |
Executing Agencies |
Financial Institutions Division-MOF |
Timetable | |
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Concept Clearance | 25 Nov 2013 |
Fact Finding | 08 Feb 2015 to 12 Feb 2015 |
MRM | 03 Jul 2015 |
Approval | 20 Nov 2015 |
Last Review Mission | - |
Last PDS Update | 10 Dec 2020 |
Loan 3318-BAN
Milestones | |||||
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Approval | Signing Date | Effectivity Date | Closing | ||
Original | Revised | Actual | |||
20 Nov 2015 | 22 Nov 2015 | 11 Dec 2015 | 30 Jun 2018 | 31 Mar 2020 | 20 Mar 2020 |
Financing Plan | Loan Utilization | ||||
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Total (Amount in US$ million) | Date | ADB | Others | Net Percentage | |
Project Cost | 150.00 | Cumulative Contract Awards | |||
ADB | 150.00 | 17 Jun 2022 | 150.00 | 0.00 | 100% |
Counterpart | 0.00 | Cumulative Disbursements | |||
Cofinancing | 0.00 | 17 Jun 2022 | 150.00 | 0.00 | 100% |
Loan 3319-BAN
Milestones | |||||
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Approval | Signing Date | Effectivity Date | Closing | ||
Original | Revised | Actual | |||
20 Nov 2015 | 22 Nov 2015 | 11 Dec 2015 | 30 Jun 2018 | 31 Mar 2020 | 20 Mar 2020 |
Financing Plan | Loan Utilization | ||||
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Total (Amount in US$ million) | Date | ADB | Others | Net Percentage | |
Project Cost | 100.00 | Cumulative Contract Awards | |||
ADB | 100.00 | 17 Jun 2022 | 98.09 | 0.00 | 100% |
Counterpart | 0.00 | Cumulative Disbursements | |||
Cofinancing | 0.00 | 17 Jun 2022 | 98.09 | 0.00 | 100% |
TA 8994-BAN
Milestones | |||||
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Approval | Signing Date | Effectivity Date | Closing | ||
Original | Revised | Actual | |||
20 Nov 2015 | 17 Jul 2016 | 17 Jul 2016 | 30 Jun 2018 | 30 Jun 2021 | 28 Sep 2021 |
Financing Plan/TA Utilization | Cumulative Disbursements | |||||||
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ADB | Cofinancing | Counterpart | Total | Date | Amount | |||
Gov | Beneficiaries | Project Sponsor | Others | |||||
400,000.00 | 300,000.00 | 0.00 | 0.00 | 0.00 | 0.00 | 700,000.00 | 17 Jun 2022 | 572,414.55 |
Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.
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Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.
None currently available.
Evaluation Documents See also: Independent Evaluation
Title | Document Type | Document Date |
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Bangladesh: Third Capital Market Development Program | Validations of Project Completion Reports | Mar 2023 |
Related Publications
Title | Document Type | Document Date |
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Capital Market Development in Bangladesh: A Sector Reform Perspective | Papers and Briefs | Oct 2016 |
The Access to Information Policy (AIP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.
Requests for information may also be directed to the InfoUnit.
ADB Provides Further $170 Million for Capital Market Reforms in Bangladesh
ADB has approved a second tranche loan of $170 million to conclude the Third Capital Market Development Program in Bangladesh.New ADB Loan to Support Further Bangladesh Capital Market Reforms
ADB has approved a loan of $250 million to help Bangladesh continue capital market reforms which should boost private investment and support the country’s drive to achieve middle-income status by 2021.
Tenders
Tender Title | Type | Status | Posting Date | Deadline |
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Program Evaluation Consultant | Individual - Consulting | Closed | ||
Program Evaluation Consultant | Individual - Consulting | Closed |
Contracts Awarded
Procurement Plan
None currently available.