1. Investment Provisions of Institutional Investors

– To make policy, legal and infrastructural arrangements to facilitate the entry and investment of institutional investors in the capital market.

– To develop necessary investment policies and transaction structures for institutional investors.

– Increase the participation of institutional investors in the primary market.

Effect:

– Increasing large and long-term investors in the capital market.

– Increasing the liquidity and depth of the market.

– The influence of too many small/short-term investors in the market may be somewhat diminished.

– Helping the market become more professional and stable.

2. Institutional Investor’s Portfolio Rebalancing

– Provision for rebalancing the portfolio of institutional investors led by the bank.

– To encourage institutional investors such as Employees Provident Fund, Citizen Investment Trust, Social Security Fund, Insurance Company and Mutual Fund to invest in the capital market.

Effect:

– Large institutional savings are circulated in the capital market.

– Investment diversification increases.

– The supply of long-term capital in the market increases.

– may help reduce market volatility.

– The market is more likely to go up as demand increases.

3. Capacity enhancement of CDS & Clearing

– To enhance the institutional capacity of CDS and Clearing to effectively handle the increasing size of securities transactions.

– Complete a study on its structural improvements.

Impact:

– Increasing the settlement efficiency and efficiency of the business.

– Systemic bottlenecks decrease even when there is a large turnover.

– Strengthen investor confidence and market infrastructure.

– The digital infrastructure needed for future capital market expansion will be ready.

4. PE/VC & Startup Financing

– To provide capital to early-stage industries and businesses.

Financing startups and projects with high growth potential through Private Equity/Venture Capital (PE/VC).

– Organize PE/VC in line with international best practices.

Effect:

– Increase equity financing by reducing dependence on bank credit.

– Startups, innovation, and technology-based businesses get capital.

– New jobs and entrepreneurship may increase.

– Increases the opportunity for capital mobilization in the productive sector.

5. Review of Capital Market Investments of Banks and Financial Institutions

– To review the investment in the capital market of banks and financial institutions from the point of view of exposure, interconnectedness, spillover effect, financial contagion risk and systemic risk.

Reviewing existing securities investment limits and risk frameworks.

Effect:

– Assistance in controlling risk between banking and capital markets.

– Excessive stock market exposure reduces the risk that can occur in the banking sector.

– Helps to strengthen financial stability.

– But if the limit is too tight, there is also a risk that institutional liquidity in the market may decrease.

6. Tax incentives for long-term investments

– Reform the existing tax system to encourage long-term investment in the capital market.

– To simplify the tax regime relating to capital gains arising from the issuance of listed securities in certain circumstances.

– Reduce the tax rate to 3.75% and 5%.

– Loss should be set off on profit and only tax on net gain.

Effects:

– Short-term speculation can make long-term investments more lucrative.

– The holding period of the investor may increase.

– Possibility of increased stability and confidence in the market.

– If tax incentives are effective, new investment can also come into the capital market.

– Investors will be encouraged to increase the investment amount significantly.

7. Secondary Market Investment of Banks and Financial Institutions

– Provision to control the speculative risk incurred by banks and financial institutions while investing in the secondary market.

– Banks and financial institutions shall make arrangements to formulate the investment policy in such a way that the maximum period of such investment will be up to 45 days.

Impact:

– Reducing the risk of highly speculative stock trading on a bank’s balance sheet.

– Incentives to mobilize the bank’s resources in the capital market sector.

– Investing in the capital market can reduce the bank’s extreme short-term impact.

In this way, the Ministry of Finance has become flexible in all respects for capital market stimulus. This is expected to revive the sluggish economy. In such a situation, when the market is going up, the companies that are underperforming can also be trapped by incorrectly increasing the market value, so investors should invest only after looking at fundamentals like the company’s management, future prospects, dividend yield, PE ratio.