Asian Development Bank Seeks Government Permission to Issue Mobile Money Bonds in Bangladesh

Strategic Insights -

The Asian Development Bank (ADB) is seeking the government's permission to issue bonds through mobile money to mobilize investment for Bangladesh's development. According to officials, the Manila-based lender plans to introduce the bond in the local currency in the domestic market first and, upon its success, offload it to overseas investors. The proposal is currently under scrutiny, with the Economic Relations Division (ERD) under the Ministry of Finance seeking opinions from various stakeholders, including the Bangladesh Securities and Exchange Commission (BSEC), National Board of Revenue (NBR), Bangladesh Bank, and the Financial Institutions Division.

Key Takeaways:

  • The ADB plans to introduce taka-denominated bonds in the local market first, with the potential to expand the initiative both domestically and internationally.
  • The proposal aims to mobilize funds domestically and reduce the private sector's reliance on traditional bank loans.
  • The ERD will thoroughly scrutinize the ADB's proposal before granting permission, citing a previous experience with the International Finance Corporation (IFC) issuing taka-denominated bonds in the London market, which was not very successful.
  • The ADB provides around $2.0 billion in annual financing to the government for public sector development and supports the private sector by offering loans for business expansion.
  • The ADB's initiative is similar to the IFC's efforts to mobilize funds in Bangladesh, including an investment of up to $50 million in Bangladesh's first-ever domestic housing bond issued by BRAC Bank.

Statistics:

  • The ADB plans to issue bonds through mobile money to mobilize investment for Bangladesh's development.
  • The ADB provides around $2.0 billion in annual financing to the government for public sector development.
  • The IFC issued its first Bangladeshi taka-denominated bond, known as the "Bangla Bond," on the London Stock Exchange in November 2019, valued at Tk 800 million (approximately $9.5 million at the time).
  • The IFC announced an investment of up to $50 million (around Tk 470 crore) in Bangladesh's first-ever domestic housing bond issued by BRAC Bank in July 2022.

Sources:

  • Officials from the Economic Relations Division (ERD) under the Ministry of Finance.
  • ADB officials, requesting anonymity.
  • "Bangla Bond" issuance on the London Stock Exchange (November 2019).
  • Investment by the International Finance Corporation (IFC) in Bangladesh's first-ever domestic housing bond issued by BRAC Bank (July 2022).