ICB fails to repay Tk3,000cr BB fund, seeks 3-year guarantee extension

The state-owned Investment Corporation of Bangladesh (ICB) has lost about one-third of the money it borrowed from the government, state-owned banks and investors after years of supporting the stock market, leaving it under severe financial pressure and prompting a fresh appeal for government assistance.

Infographics: TBS

The corporation has invested around Tk12,500 crore in the capital market, but the current market value of those investments has fallen to about Tk8,000 crore.

As a result, ICB is facing an acute capital shortage. It has failed to pay nearly Tk1,200 crore in accrued interest on loans from state-owned banks, while Tk3,000 crore borrowed from Bangladesh Bank under a government guarantee remains unpaid after the facility matured.

The ICB has asked the Ministry of Finance to extend the sovereign guarantee for another three years. The previous 18-month guarantee, granted in 2024, expired on 15 May.

The ICB, once one of the country's most profitable institutional investors, earning hundreds of crores of taka from stock market investments, is now facing mounting losses.

To address the crisis, the corporation is considering restructuring its capital by converting bank loans into equity. It is also exploring raising fresh capital through a rights issue to reduce its interest burden, although any such move would require government approval.

According to ICB's financial statements, income from capital gains, dividends and subsidiary companies is now lower than its interest expenses. The corporation is also incurring substantial losses because of operating costs and provisions against investments.

After posting a record loss of Tk1,213 crore in the 2024-25 financial year, ICB reported a further loss of Tk588 crore during the first nine months of FY26. Although the final quarter's accounts have yet to be published, the corporation expects to remain in the red for the full year.

The ICB believes it could return to profitability through capital gains and dividend income if it can repay about Tk7,000 crore in high-interest loans while continuing to manage the country's largest stock market portfolio.

Appeal to the finance ministry

In a letter dated 11 June, signed by Managing Director Niranjan Chandra Debnath, ICB said it had borrowed large sums at high interest to support the stock market in line with government and regulatory expectations.

"To support the development and stability of the capital market, ICB provided support to the market from time to time by borrowing substantial funds at high interest in line with the expectations of the government and regulatory authorities. 

"After making those investments, the prolonged downturn in the capital market led to a sharp decline in share prices. At the same time, rising interest expenses have significantly weakened ICB's financial position," the letter said.

The corporation warned that repaying the Bangladesh Bank facility immediately would require selling a large volume of shares.

"If shares are forced to be sold to repay the loan, it will have a negative impact on the capital market. Such selling pressure could undermine investor confidence and also damage the government's image," it stated.

The ICB has requested that the government guarantee for the Tk3,000 crore facility be extended till 12 March 2029.

The corporation said a recovery in the stock market would significantly increase capital gains, dividend income and other earnings while helping it recover much of its unrealised portfolio losses, enabling it to repay its debts.

Tk4,000 crore support package

Following the fall of the Awami League government, ICB received Tk3,000 crore from Bangladesh Bank under a government guarantee and another Tk1,000 crore directly from the government.

Of the Bangladesh Bank funding, Tk2,000 crore was used to repay high-interest loans, reducing annual interest expenses by Tk465 crore, while Tk1,000 crore was invested in the stock market. The additional Tk1,000 crore from the government was also invested in the market.

ICB said the investment in Category A shares under enhanced monitoring had generated strong capital gains and dividend income.

After seeking an 18-month extension of the sovereign guarantee because it could not repay the central bank funding, ICB was required by the Finance Division's Debt and Financial Assets Management Wing to pay a guarantee fee of 0.25%, amounting to Tk7.5 crore, which it has already paid.

Governance changes

ICB officials said the current board has overhauled the management of government funds following allegations of irregularities in previous years.

The board has strengthened oversight of the Portfolio Management Committee, responsible for buying and selling shares using ICB funds. Officials said weak monitoring previously allowed some dishonest officials, allegedly influenced by market operators, to purchase highly overpriced shares.

A senior ICB official, speaking on condition of anonymity, said, "The loopholes that previously existed at ICB have now been closed. Oversight of the portfolio committee has increased, and purchases through the block market have been stopped. As a result, the erosion of the portfolio has slowed, although the damage has already been done."

The official said investment decisions are now reviewed daily.

"After decisions to buy or sell shares are taken in the morning, a progress report is prepared and discussed at the end of the trading day. That report is presented to the board every 15 days for review, which has helped reduce losses."

The official said ICB urgently needs further government financial support or low-interest funding.

"The government has already provided funds at an interest rate of 4%. If additional low-interest funds are provided solely to repay existing loans, the institution can be saved. Our annual operating expenses are only around Tk100-120 crore, but interest payments alone amount to nearly Tk1,000 crore. It is simply not possible to sustain ICB under these circumstances."

If additional government funding is unavailable, ICB is also considering a rights issue or converting loans from state-owned banks into equity.

"The banks that have lent to ICB – Sonali Bank, Janata Bank and Agrani Bank – are also among its shareholders. If their loans are converted into shares, ICB's interest burden will fall, benefiting both the corporation and the banks."

The official added that ICB currently has around Tk1,200 crore in overdue interest that it cannot pay because of a lack of funds.

"As the banks have not received these payments, they are making provisions against the loans, which is affecting their own financial statements. If the government allows loans to be converted into shares, ICB's debt burden will fall and, with its existing investment portfolio, the corporation can return to profitability."

Debt burden grows as portfolio loses value

The ICB has repeatedly borrowed from banks to support the stock market in line with government and regulatory efforts to maintain liquidity and prevent market declines.

Its reports show total borrowings rose from Tk2,277 crore in 2010-11 to Tk13,294 crore in 2025-26. Over the same period, the purchase value of its investment portfolio increased from Tk1,503 crore to Tk14,115 crore, while its market value fell to Tk8,6 08 crore, leaving an erosion of Tk5,506 crore.

Higher lending rates also sharply increased financing costs. Interest expenses rose from Tk184 crore in 2010-11 to Tk1,151 crore in 2021-22 before falling to around Tk500 crore in 2025-26 after ICB used Bangladesh Bank funds to repay Tk2,000 crore of high-interest loans.