Asian Development Bank has recommended immediate privatisation of the Investment Corporation of Bangladesh to break the state-owned financial institution's monopoly on investment banking in the country, reports UNB.

The government should hasten either to eliminate or reduce its ownership In ICB to a minority position for making the investment banking activity competitive and activate country's depressed capital hiarkct. ADB pleaded in a study on Bangladesh capital market.

ICB should be turned into a joint venture with a reputed stock brokerage house to make it more responsive to the investment banking requirements of the private sector, it suggested.

At present, the government owns 81 per cent of the Investment Corporation, floated in 1976.

The ADB study, submitted to the government early this month, viewed that because of easy access to concessional government funds and an exclusive right to establish mutual funds and unit trusts. ICB had established monopoly over investment banking.

As a result, according to the study, the growth of three private Investment companies — IPDC, NCL and BCI — and the capital market in general have been stifled.

The access to various concessional funds has enabled ICB to provide generous — • margin loans to clients for the purchase of shares and engage itself in loan syndication, make equity investment and provide long-term loans.

ADB recommended that the

' government, including Bangladesh Bank, should immediately stop concessional financing of ICB. and the Institution should mobilise its resources direct from the market at market rates.

The Asian Bank also asked for withdrawal of the mandatory provision for allocation of 20 per cent of every public Issue of share to ICB.

Instead, the study suggested, the corporation be asked to buy shares for its mutual fund and unit trust operations direct from the stock exchange.

The ADB capital market experts observed despite enjoying continued benefits and concessions. ICB s operational and financial performance had not been successful in its ' mandated role of contributing to the development of the capital market."

Despite getting resources at concessional rates, the report said. ICB is going through serious financial difficulty.

A disinvested ICB. viewed the ADB report, would "better and efficiently respond to the requirements of the private sector and contribute effectively to the development of the capital market.”