Finance minister AHM Mustafa Kamal said on Thursday the country's capital market has been facing certain degree of liquidity crisis for some time.
But there is no such problem in the case of banking sector, he told parliament during the question-answer session.
The day's business opened with the finance minister replying to questions from the lawmakers.
He said the amount of total negative equity belonging to TREC (Trading Right Entitlement Certificate) holders and merchant bankers stood at Tk 120.9 billion [12090.07 crore] as of September 30, 2019 from 2010-11.
The figures belong to 28 merchant banks, 81 stock brokers of Dhaka Stock Exchange and 18 of Chattogram Stock Exchange, he said in a written reply to a question.
The losses mainly happened due to fluctuations in stock prices and, partly, because of their impact on margin loans.
If market intermediaries sell their stocks [at losses], Mr Kamal said, there will be a negative impact on the market. This also leads to losses by merchant bankers.
"In such a situation, merchant banks embrace financial trouble to some extent," he mentioned.
The minister said the flow of credit to the private sector has fallen in recent times. The rate of loan recovery also has remained low.
Against this backdrop, he said, banks and other financial institutions also have not been investing in the capital market.
Mr Kamal said the government has, however, been working on how to overcome this money-market crisis.
The prime minister had held a meeting with stakeholders at her office on January 16, he noted.
Mr Kamal said the PM had discussed both short-term and long-term strategies to improve the capital market situation.
He said as a short-term strategy, the government is now trying to raise the participation of banks and non-bank financial institutions in the capital market.
"The government is evaluating ways to lend money to merchant bankers and institutional investors on easy terms.
"The government is considering ways to raise the capacity of ICB [Investment Corporation of Bangladesh] to enhance investment."
Mr Kamal said the government is also working on how to raise the number of quality IPOs [initial public offerings], including those of multinational and state-owned companies, in the stock market.
Mr Kamal said the proposed 9.0-per cent lending rate will be effective from April 01 next.
The rate will be applicable to most of the sectors of the economy, he added.
Mr Kamal said this in reply to a query from Md Shahiduzzaman Sarkar of Naogaon.
Earlier on December 29, the prime minister discussed the matter with stakeholders and observed that banks might divert their funds from the manufacturing sector if it is introduced immediately.
