Bangladesh: Third Capital Market Development Program

Sovereign Project | 45253-002

Summary

The specific objective of the proposed Capital Market Development Program III (CMDP III) is the enhanced capacity and size of the capital market that is grounded on a strong legal and regulatory framework. The CMDP III is scheduled to be approved by the Board soon after disbursal of the second and final tranche of the ongoing $300 million CMDP II.

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Consulting Notices

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Procurement Documents

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Project Name Third Capital Market Development Program
Project Number 45253-002
Country Bangladesh
Project Status Proposed
Project Type / Modality of Assistance Loan
Technical Assistance
Source of Funding / Amount
Loan: Third Capital Market Development Program
Ordinary capital resources US$ 150.00 million
Asian Development Fund US$ 100.00 million
TA: Third Capital Market Development Program
Technical Assistance Special Fund US$ 400,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Knowledge solutions
Partnerships
Private sector development
Sector / Subsector Finance - Money and capital markets
Gender Equity and Mainstreaming No gender elements
Description The specific objective of the proposed Capital Market Development Program III (CMDP III) is the enhanced capacity and size of the capital market that is grounded on a strong legal and regulatory framework. The CMDP III is scheduled to be approved by the Board soon after disbursal of the second and final tranche of the ongoing $300 million CMDP II.
Project Rationale and Linkage to Country/Regional Strategy

ADB's financial sector strategy for Bangladesh, which is included in the country partnership strategy and the new country operations business plan, is based on the Sixth Five-Year Plan, lessons from ADB's previous financial sector interventions, and coordination with other development partners. In line with the Sixth Five-Year Plan and ADB's Strategy 2020 priorities, capital market development and bond market development focusing on the provision of long-term infrastructure is one of ADB's focus areas in its Bangladesh public sector operations. Strategy 2020 includes support for capital market development as one of ADB's core operational priorities because it can facilitate private sector development and infrastructure development, which rely on the availability of long-term local currency funds for viable financial structures. The proposed program is fully aligned with the government's Sixth Five-Year Plan, ADB's Strategy 2020, and ADB's country partnership strategy with Bangladesh.

A policy-based loan is proposed and justified in this case since it is targeted at a sector in which the government is firmly committed to reform, but in which significant economic, financial, and social costs are associated with the reform program and are likely to hinder its smooth and timely implementation without the additional support and inducement provided by a policy-based loan.

Impact A well functioning financial system that supports basic capital and investment needs, as well as Bangladesh's longer term economic objectives.
Outcome Enhanced capacity and size of the capital market in a strong legal and regulatory framework
Outputs

Improved legal and regulatory structure

Bond market developed and scope of securitization deepened

Successful financial instrument tax policies developed

Derivatives developed

Insurance sector developed

Geographical Location
Safeguard Categories
Environment C
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects The captial market reforms under the program are likely to have no adverse environmental impacts. Therefore, the program's environment category is assigned as C.
Involuntary Resettlement The program has no involuntary resettlement impacts, the program's involuntary resettlement category is assigned as C.
Indigenous Peoples The program's indigenous peoples category is also assigned as C.
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Responsible ADB Officer Syed Ali-Mumtaz H. Shah
Responsible ADB Department South Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, SARD
Executing Agencies
Bank and Financial Institutions Division-MOFBangladesh Secretariat
Dhaka-1000 Bangladesh
Timetable
Concept Clearance 25 Nov 2013
Fact Finding 08 Feb 2015 to 12 Feb 2015
MRM 03 Jul 2015
Approval 27 Oct 2015
Last Review Mission -
Last PDS Update 20 Mar 2015

Safeguard Documents

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Evaluation Documents

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