The Bangladesh Securities and Exchange Commission (BSEC) has proposed major changes to its 2021 debt securities rules to expand Bangladesh鈥檚 weak bond market, introduce new types of sustainable instruments, and tighten monitoring of how funds are used.
The draft, released on September 23 for public opinion, outlines reduced fees for sustainable bonds, mandatory disclosures, and annual impact reporting, aiming to attract investors while curbing misuse of proceeds.
Under the proposals, issuers will be able to raise money through new categories such as gender bonds, orange bonds, sustainability-linked bonds, and sukuk, alongside existing green and social bonds.
Gender bonds would finance gender equality and women鈥檚 empowerment projects, orange bonds would combine gender equality with social or climate goals, and sustainability-linked bonds would tie funding to measurable targets.
The rules emphasize accountability and transparency.
Issuers would need to disclose exactly how proceeds will be used, whether for new projects or refinancing, and report regularly to both investors and trustees.
Funds must be kept in escrow or designated accounts, and external reviewers with proven expertise would verify compliance.
Issuers would also be required to publish annual impact reports, detailing outcomes such as carbon reduction, job creation, or improvements in public services.
To encourage adoption, the BSEC plans to cut consent fees for sustainable bonds to 0.03 per cent from the general 0.10 per cent. This incentive, regulators believe, will push companies and institutions to shift long-term financing away from bank loans toward bond issuance.
Bangladesh鈥檚 bond market remains shallow, dominated by government securities, with corporate bonds accounting for less than 1 per cent of GDP.
Dhaka Stock Exchange data show fewer than a dozen listed corporate bonds, with negligible trading activity.
Analysts say the amendments are an attempt to diversify financing sources away from the country鈥檚 bank-dependent system, where long-term loans remain scarce and non-performing loans high.
By encouraging companies to issue bonds for infrastructure, renewable energy, housing, or gender-focused enterprises, regulators hope to attract institutional investors such as pension and provident funds while also reducing pressure on banks.
Instruments like gender and orange bonds are also expected to direct financing toward women entrepreneurs and marginalised communities, shifting focus from the large conglomerates that dominate traditional credit markets.
At the same time, the success of the framework will depend on strict oversight.
BSEC has faced criticism over weak monitoring of debt instruments in the past, and its requirement for external reviews, audited disclosures, and trustee monitoring is meant to restore credibility.