ICB on the Brink of a Fiscal Cliff
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The Investment Corporation of Bangladesh (ICB), once regarded as the vigilant guardian of the country’s stock market and a “last resort” institution during crises, is now facing an existential threat. Persistent losses, a heavy burden of high-interest loans, defaulted investments, and accumulated irregularities and corruption have pushed the state-owned investment body to the edge.
Market analysts say ICB’s current collapse is not sudden. Rather, it is the result of more than a decade of flawed investment policies, interference from influential groups, and severe regulatory failure.
Investigations show that after the historic stock market crash of 2010–12, ICB was assigned a key role in stabilizing the market. However, instead of prioritizing asset quality, it attempted to artificially support the index, becoming heavily exposed to high-risk securities early on. Between 2013 and 2017, under political and influential recommendations, the institution purchased overvalued shares of weak and “junk” companies.
With alleged collusion between dishonest groups and past management, uncontrolled trading in the block market effectively institutionalized “pump and dump” schemes—where prices are artificially inflated before dumping shares onto the market.
Due to these poor investment decisions, ICB gradually fell into a severe liquidity crisis. Instead of strengthening institutional capacity, the management increasingly relied on high-interest borrowing from banks and financial institutions, making the organization heavily debt-dependent. Regulators were aware of the situation but failed to take effective action at the time.
Currently, fixed deposits worth around Tk 1,205 crore are stuck in 12 financially distressed leasing companies and weak banks, with little chance of recovery. Meanwhile, ICB must pay nearly Tk 1,000 crore annually in interest on its borrowings, compared to only about Tk 100 crore in annual operating expenses.
The crisis is no longer confined to ICB alone. Major state-owned banks such as Sonali Bank, Janata Bank, and Agrani Bank had extended large loans to ICB. As ICB has failed to repay loans and interest on time, these banks are now facing significant capital and provisioning shortfalls, indirectly affecting the entire banking sector.
In 2023, the institution recorded a historic loss of Tk 121.40 crore. In just the first quarter of the current year, another Tk 15.40 crore was added to its losses. Although the current management has made some profitable investments in “A” category shares, legal and regulatory constraints prevent these gains from being reflected in official financial statements, keeping reported losses high.
The current board has taken strict measures, including stopping block trading, limiting investments to “A” category shares, and converting debt into equity through bonds. It has also requested approximately Tk 1,300 crore in government funding to address outstanding obligations.
However, Professor Md. Al-Amin from the Department of Accounting and Information Systems at the University of Dhaka said that long-term audit and oversight failures allowed irregularities to go unchecked. He emphasized that a government bailout alone will not save ICB. A comprehensive forensic audit and structural reform of the investment process are urgently needed.
If the stock market is to return to its natural course, restoring stability at ICB is essential. Yet the central question remains for ordinary investors: can the institution recover through a special government package, or will the burden of this massive financial failure ultimately fall on taxpayers?