ICB gets three years more to repay Tk3,000cr amid financial strain

The government has extended the state guarantee for the Investment Corporation of Bangladesh (ICB), a state-owned investment bank, for a Tk3,000 crore loan from Bangladesh Bank, granting a three-year extension until 2029 with a view to stabilising the country's capital market.

Infograph: TBS

Amid mounting pressure and failure to repay the outstanding loan despite the expiration of the original deadline in May, the ICB applied to the government urging an extension, as it is struggling to repay due to a severe liquidity crunch.

In a letter expressing its concerns, the ICB stated that if it is forced to repay the loan now, it would have to sell shares in the secondary market, which would have a negative impact on the market.

According to an official letter from the Financial Institutions Division (FID) of the Ministry of Finance, the sovereign guarantee has been extended for three years, effective from 13 May, 2026 with the primary objective of stabilising the country's capital market.

However, the relief comes with strict financial strings attached that ICB must ensure full repayment of the principal amount within the extended deadline, while keeping all other original terms of the loan agreement unchanged.

The letter states that the primary objective of extending the state guarantee is to ensure stability in the capital market. To this end, ICB's share trading activities and portfolio restructuring activities during the extended period must be closely monitored by the FID.

Also, with the aim of bringing ICB's administrative and operational expenses down to a rational level, reducing the burden of rising interest costs, and overcoming the erosion of portfolio capital, a specific, time-bound, and implementable "Business Recovery Plan" must be formulated and submitted to the FID, and the progress of the implementation of the said plan must be monitored regularly.

The ICB must submit an updated report on ICB's financial liquidity position, capital market investment activities, and the progress of loan repayment preparations must be sent to the Finance Division and the FID every 3 months during the extended period.

Also, the ICB is directed to finalise an updated repayment Schedule, coordinated with Bangladesh Bank, which must be submitted to the Finance Division.

Currently, the ICB is facing a severe capital shortage with around Tk5,506 crore fund erosion due to volatile capital market.

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 of December 2025.

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.

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.

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 corrupt 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."

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.