TERM PAPER ON

FINANCIAL INSTITUTIONS AND MARKETS (FIN 8602)

Topic: Investment Banking and its Operation in Bangladesh

Prepared for:
Md. Shahidul Islam (Zahid) Ph.D.
Associate Professor
Faculty of Business Studies

Prepared by:
Name ID
Md. Rokonuzzaman 17015007
Md. Sadman Ahsan 17015035
Md. Haseen Mahtab 17015081
Md. Mehadi Hassan Muhid 17015029

Md. Shakwat Hossen Reyadh 17015097

Nusrat Jerin 17015004

Major-Finance
MBA (Professional)

Bangladesh University of Professionals (BUP)

Mirpur Cantonment, Dhaka-1216
 LETTER OF TRANSMITTAL

April 13, 2019

Md. Shahidul Islam (Zahid) Ph.D.

Faculty of Business Studies,
Bangladesh University of Professionals
Mirpur Cantonment, Dhaka.

Subject: Submission of the Term paper on Financial Institutions and Markets course.

Dear Sir:

We have prepared a term paper which has been assigned to us as a course requirement. In view
of that, we worked with utmost enthusiasm and applied our knowledge and effort to prepare the
report. We have tried hard in preparing the report and tried to make the report clear and
comprehensive within constrains.

We appreciate having this task. If you need a kind of assistance interpreting this report or further
explanation we will be glad to provide it accordingly.

Sincerely yours

Md. Rokonuzzaman
Md. Sadman Ahsan
Md. Haseen Mahtab
Md. Mehadi Hassan Muhid

Md. Shakwat Hossen Reyadh

Nusrat Jerin
 ACKNOWLEDGEMENT

Alhamdulillah, First of all we would like to express our deepest gratitude to God for giving us
the ability, strength and opportunity to finish this term paper within the scheduled time.

We would like to express thanks to our honorable teacher Md. Shahidul Islam (Zahid) Sir for
providing us valuable guidance and suggestions in preparing this term paper successfully. He has
been gracious enough to take time out from his busy schedule for giving us.

Last but not the least, we would like to thank our family members and all the friends who have
always stood by and supported us-both morally and practically. We would also like to thank
BUP authority for providing Library and internet facility throughout the week including
holidays.

i
 Executive Summary
The purpose of this study is to evaluate the performance of investment banking and its procedure
in Bangladesh with a particular emphasis on the Bangladesh economy. In Bangladesh the
establishment of investment bank added value to the stock market which plays a vital role in the
progress of economic development. In this report we try to give an overview of investment
banking in Bangladesh with its functions and rule & regulations. We also examine the key role
play by investment bank for economic as well as social welfare of a Bangladesh.To develop a
countries economy like Bangladesh need adequate amount of employment creation. Investment
bank’s roles on creating employment also focus in our report. For better understanding about
Investment Banking we choose Investment Corporation of Bangladesh (ICB) and try to give
some idea about investment banking operation in Bangladesh. Investment Corporation of
Bangladesh acts as anInvestment Banker, Market maker & Portfolio Manager. As banking
financial institution itreceives term deposits and provides margin loan. As a development
financial institutionit provides term loan to finance equity gap, provides working capital. As a
market makerit issues unit certificate, underwriting securities. It also issues and manages
MutualFunds. That is why it is very much important for us to know about practical functions
ofICB which are playing significant roles for the economic development of Bangladesh. At last
we pinpoint our findings and recommendation about key factor related to this report to provide
clear view on the Influence of investment Bank in development and economic boost of
Bangladesh.

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 TABLE OF CONTENTS

CONTENT PAGE NO.

Acknowledgement i
Abstract ii
CHAPTER-1
1.1 Introduction 1
1.2 Objective of the study 1
1.3 Methodology of the report 2
1.4 Limitation of the study 2
CHAPTER-2
2.1 Definitional Analysis of Investment Banking 3
2.2 Types of Investment Banking Companies 3
2.3 Overview of Investment Banking in Bangladesh 4
2.4 Functions of Investment Banking in Bangladesh 4
2.5List of Investment Banks in Bangladesh 6
2.6 Foreign Investment Banks in Bangladesh 6
2.7 Role of Investment Banking in Economic Development 7
2.8 Rules & Regulations Regarding Investment Banking 9

2.9 Importance of Investment Banking In Bangladesh 10

CHAPTER-3
3.1 Overview of Investment Corporation of Bangladesh (ICB) 11
3.2 Objectives of the ICB 11
3.3 Basic Function of ICB 11
3.4 Business Policy of ICB 12
3.5 Product and Services of ICB 13
3.6 Subsidiary Companies of ICB 15

3.7 BSEC & Investment Banking 17

CHAPTER-4
4. Findings and Analysis 18
CHAPTER-5
5.1 Recommendations 19
5.2 Conclusion 19
References 20
 Chapter 1
1.1 Introduction
Investment Banking is an American synonym of merchant banking. It is a financial institution that
assists individuals, corporations and governments in raising capital by underwriting and/or acting
as the client's agent in the issuance of securities. An investment bank may also assist companies
involved in mergers and acquisitions, and provide supplementary services such as market making,
trading of derivatives, fixed income instruments, foreign exchange, commodities, and securities. It
also provides advisory services on corporate matters to the firms they lend to.an Investment Bank
is a financial intermediary that executes a variety of services. Investment banks focus in large and
complex financial transactions such as underwriting, acting as an arbitrator between a securities
issuer and the investing public, assisting mergers and other corporate reforms, and acting as a
broker and/or financial adviser for institutional clients.

Leading investment banks are Barclays, Bank of America Merrill Lynch, Warburg’s, Goldman
Sachs, Deutsche Bank, JP Morgan, Morgan Stanley, Salomon Brothers, UBS, Credit Suisse,
Citibank and Lazard etc. Some investment banks concentrate in particular industry divisions. Many
investment banks also have retail operations that help small, individual customers. Though
Bangladesh has not adequate specialize investment bank but most of the commercial bank has its
wings to provide investment banking services to its client and different parties.

In this report our main aim is to find the key factor related to Investment Banking and the operation
of Investment Banking in Bangladesh. To analyze the operation of Investment Banking Investment
Corporation of Bangladesh (ICB) has been chosen. Investment Corporation of Bangladesh (ICB) is
a statutory corporation. It is mainly an investment bank. Investment Corporation of Bangladesh
(ICB) is playing an important role to build, nurture & to enhance of a Capital Market for the
economic growth of Bangladesh.

1.2 Objective of the study

Broad Objective:

An investment bank is a financial institution, which by selling securities and deployed funds to the
detail economic unit's also buying underwriting securities. The main objective of this report is to
ascertain the overview of Investment Banking and how Investment Banking operates its process in
Bangladesh.

Specific Objectives:

To achieve the main objective, the following specific objectives have been covered in this study:

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  To get a broader overview of Investment Banking in Bangladesh.
 To discuss functions of Investment Banking in Bangladesh.
 Also we discuss about the role of Investment Banking in economic development.
 To evaluate some Rules & Regulations regarding Investment Banking.
 To present an overview of Investment Corporation of Bangladesh.
 To give some recommendations for improving the current status of Investment Banking in
Bangladesh.

1.3 Methodology of the report

Research methodology is a crucial part of a report or term paper. This is the part where people can
determine how report prepared and what type of research method had been used to prepare the
report. As we working a report related to investment bank as well as its role in the economic
development of Bangladesh we need to exercise different economic data to justify our report. This
report is mostly prepared by the secondary sources of evidence. Internet has been widely used
since we are living an age of technology and internet is a full of information which help us in an
effective manner to prepare our report efficiently. We took help from different academic book,
websites, journals, online newspaper, and conference report, some national and economic report
and so on. We used only those information which was related to the report topics.

1.4 Limitation of the study

In conducting a report, every report is more or less, best with the limitation on the subject of time,
cost and staffing. Although we have put a lot of effort to carry out the report in a way that produces
the expected outcome, but we have faced with some limitations.

 While carrying out a report, time is one of the most important factors. It is time that
determines what the research methodology is going to be. During our three-month-
semester, there was a limited time schedule. As a result, we could not go as in depth of this
report as we wanted.

 Some desired information could not be collected due to confidentially of business.

 Load of works was also a great barrier for us to prepare the report in earlier time.

 Also our lack of experience to make such report is also a factor.

Lastly, we have to say that such limitations we cannot ignore though we tried our best to arrange
data within a very short period of three months.

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 Chapter 2
2.1 Definitional Analysis of Investment Banking
An Investment Bank could be best defined as a financial institution conducting money market
activities and lending, underwriting and financial advice, and investment services whose
organization is characterized by a high proportion of professional staff able to able to approach
problems in an innovative manner and to make and implement decisions rapidly. An Investment
bank differs from a regular investment bank as it generally deals in the commercial banking
requirements of international finance as well as stock underwriting and long-term corporate loans.
An Investment bank is known as a wholesale bank and isn't used by the general public. Most
Investment banks deal with large corporations as well as with other Investment banks, large
financial institutions and, sometimes, various governments around the world. Investment banks are
not like ordinary bank where individuals can open up accounts by making deposits.

Financial intermediaries that acquire the savings of people and direct these funds into the business
enterprises seeking capital for the acquisition of plant and equipment and for holding inventories
are called 'investment banks'. Investment Banking is an American synonym of merchant banking.

Features of Investment Banking: Long term financing, Security, merchandiser, Security

middlemen, Insurer, Underwriter.

2.2 Types of Investment Banking Companies

Investment banking companies are of two types:
1. Open-ended and
2. Closed-ended.
The open-ended ones, generally referred to as mutual funds, repurchase shares in any quantity as
and when holders offer them for sales. Thus, the amount of shares of the open-ended investment
companies in market changes continually in response to public demand.
Closed-ended investment companies sell only a specific number of ownership shares. An investor
wanting to acquire shares of a closed-ended investment company must find another investor who
wishes to sell. Investment companies do not take part in the transaction. In addition to selling
equity shares, closed-ended companies issue a variety of debt and equity securities including
preferred stock, regular and convertible bonds, and stock warrants for raising funds.

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2.3 Overview of Investment Banking in Bangladesh
The Bangladesh Securities and Exchange Commission, based on SRO No 59 of 24 April 1996, and
a decision taken by it on 17 August 1997, invited letters of intent from 14 institutions for
registration of merchant banks. Prior to this decision, 7 institutions submitted such letters of intent
and BSEC gave registration to a total of 19. Presently, a total of 50 merchant banks are operating in
the country, and their aggregate paid-up capital amounts to about Tk 36 billion. Among them 43
are full-fledged merchant banks. Merchant banks in Bangladesh are actively governed by the
Bangladesh Securities and Exchange Commission (BSEC) and submissively by the Bangladesh
Bank.

2.4 Functions of Investment Banking in Bangladesh

The main functions of Investment Banking are as follows:

1. Issue Management: Issue Management function of merchant Banking helps capitalmarket

to increase the supply of securities. Being a Issue Manager these FIs provide assistance to
the Private Limited Companies intended to be converted into Public Limited Companies by
way of obtaining necessary permission from the relevant authorities, preparing prospectus
for public issue of shares and debentures, involving itself in the collection of application
money, scrutiny of applications, arranging for lottery relating to allotment, if required,
allotment of shares and debentures, refund of application money etc.
FIs=Financial Institutions

2. Mergers & Acquisitions: The phrase mergers and acquisitions (abbreviated M&A)refers
to the aspect of corporate strategy, corporate finance and management dealing with the
buying, selling and combining of different companies that can aid, finance, or help a
growing company in a given industry grow rapidly without having to create another
business entity. Merchant banking helps to negotiate companies in this case.
Other functions that differ from FIs to FIs are Factoring, Asset Securitization, OTC Market,
Capital Re-Structuring etc.
In addition these FIs can also perform the activities of:
 Project counseling

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  Lending to stock investors
 Pre-Investment Studies, etc.

3. Portfolio Investment Management Services: Portfolio means a collection of investments

owned by an investor, an institution or a mutual fund and portfolio manager means the
entity responsible for investing a mutual fund's assets, mapping out its investment strategy
and managing day-to-day securities trading. Portfolio management is the process of
building, managing and assessing an inventory of company products and projects.´6 One of
the most important functions of merchant banking is to provide Portfolio Management
service to the customer. Basically, Portfolio Management Services program has four
different wings to provide portfolio investment management services.
The BSEC allowed banks to launch merchant banking operation through opening of
separate wing mainly to deal in portfolio investment on behalf of clients' account in order to
channel pool of investors' fund into the stock market in an organized manner.

Other functions of Investment Banking are:

 Underwriting of initial public offering of shares and debentures.
 Underwriting of right issue of shares.
 Direct purchase of shares and debentures including Pre-IPO placement and equity
participation.
 Managing investors’ account.
 Managing Open End and Closed End Mutual Funds.
 Operating on the Stock Exchanges.
 Providing investment counsel to issuers and investors.
 Participating in Government divestment Program.
 Participating in and financing of, joint-venture projects.
 Dealing in other matters related to capital market operations.
 Trusty, Custodian, Bank Guarantee.
 Consumer Credit.

5
2.5 List of Investment Banks in Bangladesh
AB Bank Agrani Bank
Al-ArafahBanl Bangladesh Development Bank
Bank Al-falah Bank BASIC Bank
Bank Asia City Bank
BRAC Bank Dutch-Bangla Bank
Dhaka Bank EXIM Bank
Eastern Bank Habib Bank
First Security Bank ICB Islamic Bank

HSBC Jamuna Bank

IFIC Bank Krishi Bank
Janata Bank Mutual Trust Bank
Mercantile Bank National Bank of Pakistan
National Bank One Bank
NCC Bank Prime Bank
Premier Bank Rajshahi Krishi Unnayan Bank
Pubali Bank

2.6 Foreign Investment Banks in Bangladesh

A foreign branch bank is a type of foreign bank that is obligated to follow the regulations of both
the home and host countries. Because the foreign branch banks' loan limits are based on the parent
banks capital, foreign banks can provide more loans than subsidiary banks. Here are the foreign
investment banks of Bangladesh-

1. Bank Al-Falah Limited

2. Citibank N.A

3. Commercial Bank of Ceylon PLC

4. Habib Bank Limited

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5. National Bank of Pakistan

6. Standard Chartered Bank

7. State Bank of India

8. Hong Kong and Shanghai Banking Corporation Limited (HSBC)

9. Woori Bank

2.7 Role of Investment Banking in Economic Development

Investment bank play crucial role in Bangladesh economy whether it’s directly or indirectly. Now
we will discuss its influence in Bangladesh economy:

 GDP Growth & Investment Banking

GDP reflect a countries overall growth during year investment bank play both direct and indirect
role in overall GDP growth in Bangladesh economy. As investment banking made direct and
indirect investment in the economic development of Bangladesh over years. The amount increase
as years goes and provide healthy contribution in GDP growth. Bangladesh may face trouble in
attaining the Medium Term Macro-economic Agenda targeted growth rate due to investment
deficiency and increasing savings-investment gap. Though World Economic recession play vital
effect to achieve its targeted GDP growth in upcoming year but generating investment through
investment banking might help to overcome such obstacle.

 Employment Creation and Investment banking

To generate adequate amount of employment is must for developing a country like Bangladesh.
Investment Bank can play positive role toward employment creation. As the number of
investment bank increase over the year it’s create employment opportunity. On the other hand
investment bank generating capital fund for different industries where more employment
creates.As industrial sector grows and more employment generate its develop Bangladesh overall
economy.

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  Infrastructure development & Investment Banking relation

The insufficiency in infrastructure is one of these major challenges. The infrastructure of the
country is currently inadequate to keep pace with the developing economy. Government take
some mega project for infrastructure development which can boost faster Bangladesh economy.
To implement such project government need fund. Investment bank can generate adequate fund
for infrastructure development as well as Bangladesh economy.

 Technological improvement & Investment Banking

Technology is important element in robust economic growth. Investment banking activities

always work with new technology. At the same time every economic activity its directly lies
with modern technology whether its manufacture, agriculture, Medical, Education, Construction
and all the sector related to economic development. Now investment bank provides online
services to perform quicker financial activity as well as development activity.

 Foreign Currency reserve & Investment banking

Foreign currency reserve play important role for a country. As it reflects the countries overall
financial strength Bangladesh concedes a remarkable increase in its foreign currency reserve.
Investment banking plays indirect effect on this as they help to increase export through their
investment activities. Remittance plays a vital role along with export to increase foreign reserve.

 SME Sector & Investment banking

In the present economic growth in Bangladesh SMEs sector plays an important roles. Investment
bank is spending significant volume of credit under various programs such as Small Enterprise
Development Project, Self-help Credit Program, and Projects for Small Entrepreneurs, Special
investment Program and Agro-based Supervisory Industrial Credit etc. for the promotion and
development of SMEs. Investment bank invest huge amount of money in SMEs sector.

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 Inflation & Investment banking

The influence of inflation depends on the form of securities you hold. A company’s income and
earnings should rise at the similar pace as inflation. The mixture of a bad economy with a rise in
costs is bad for the stocks as well as capital market. As a normal consumer, the more cash a
company carries, the more its purchasing power decreases for the reasons of increasing inflation.
Investment Bank helps to control inflation by following monetary policy.

 Per capital income in relation to Investment banking

The per capita income reflect economic scenario of Bangladesh. It also indicates improve living
condition and lifestyle of the people. As Bangladesh economy is growing day by day, per capita
income also increasing. Investment bank help to increase per capita income through employment
creation, industrial sector investment, capital market building and so on.

 Export & Investment banking

At the development of investment banking, the working capital of industry sector is increasing
as well as it helps to increase overall export goods and services. Though Bangladesh has less
export than import but in its overall export are greatly contributed by RMG sector. Investment
bank creates funding to boost this sector as well as amount of export.

2.8 Rules & Regulations Regarding Investment Banking

1) The total investment in such fund(s) made by any scheduled bank shall be limited up to Tk. 2
(Two) billion.

2) Before making any firm commitment to investment in such fund(s), the investor bank
company shall have to apply for permission from Department of Off-site
Supervision,Bangladesh Bank (BB). In this regard, a resolution passed in the Board of Directors
of the bank describing the intention of investment in such fund(s) along with the latest
information regarding position of Capital, Liquidity, Asset and Liability and other information as
prescribed by Bangladesh Bank from time to time shall have to be submitted by the bank.

9
3) The investor bank company shall enter into an agreement with the trustee of such fund(s) so
that no investment shall be made by such fund(s) with any related party of the investor bank
company or no investment shall be made to purchase the share/debenture/bond or similar
instruments of the investor bank or no fund shall be deployed in such investment which forms a
financial claim over any other bank or financial institution in future certifying that no such
investment has already been made. The copy of this agreement shall be submitted to Bangladesh
Bank with application as described in clause (2) above.

4) Investment in such fund(s) shall not be included in the Capital market investment, under sub-
section (1) of section 26Ka of the Bank-Company Act, 1991 (Amended up to 2013), of the
investor bank.

2.9 Importance of Investment Banking In Bangladesh

Investment bankers make available finance for business enterprises acting as intermediaries
between them raising demand for funds and the supplies of funds besides rendering various other
services. The following are some of the reasons why specialist Investment bank has a crucial role
to play in Bangladesh:

 Helps the corporations in raising capital. It facilitates the trading of securities thereby,
increasing the liquidity of the securities.
 It provides investment opportunities to the individuals or entities.
 Most of the corporations get advisory services from the investment banks regarding the
mergers, acquisitions and divestiture.

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 Chapter 3
3.1 Overview of Investment Corporation of Bangladesh (ICB)
Investment Corporation of Bangladesh (ICB) is a statutory corporation. It is mainly an
investment bank. As an investment bank is a financial institution, which mobilizes fund from the
surplus economic units through various mutual funds and sale of securities and develops funds
for the deficit economic units through purchase and/or underwriting of securities.

The Investment Corporation of Bangladesh (ICB) was established on 1 October 1976 under “The
Investment Corporation of Bangladesh Ordinance, 1976” (No. XL of 1976). The establishment
of ICB was a major step in a series of measures undertaken by the government to accelerate the
pace of industrialization and to develop a well-organized and vibrant capital market particularly
securities market in Bangladesh. ICB caters to the need of institutional support to meet the equity
gap of the industrial enterprises. In view of the national policy of accelerating the rate of savings
and investment to foster self-reliant economy, ICB assumes an indispensable and pivotal role.
Though the enactment of the Investment Corporation of Bangladesh (Amendment) Act, 2000
(No. of XXIV of 2000), reforms in operational, strategic and business polices have taken place
by establishing and operating subsidiary companies under ICB.

3.2 Objectives of the ICB

Every organization has some objectives to reach its organizational goal. Investment Corporation
of Bangladesh is not exception of that. The main objectives of ICB are as follows:
 To encourage and broaden the base of investment.
 To develop the capital market.
 To mobilize savings.
 To promote and establish subsidiaries for business development.

3.3 Basic Function of ICB

In order to achieve its objectives ICB Carry out the following functions. The main functions of
the ICB are as follows:

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 Direct purchase of shares and debentures including Pre-IPO placement and equity
participation.
 Providing lease finance to industrial machinery and other equipment’s singly or by
forming syndicate.
 Underwriting of initial public offering of shares and debentures.

 Underwriting of right issue of shares.

 Managing investors' Accounts.

 Managing Open End and Closed End Mutual Funds.

 Operating on the Stock Exchanges.

 Providing investment counsel to issuers and investors.

 Providing Consumer Credit.

 Providing Bank Guarantee.
 
 To act as Trusty and Custodian.

 Dealing in other matters related to capital market operations.

3.4 Business Policy of ICB

 To act on commercial consideration with due regard to the interest of industry,
commerce, depositors, investors and to the public in general.
 To provide financial assistance to projects subject to their economic and commercial
viability.
 To arrange equity support and loans for projects singly or through consortium of financial
institutions including banks.
 To encourage and develop entrepreneurship in the country.
 To diversify investments.
 To inspire small and medium savers for investment in securities.
 To create employment opportunities.
 To encourage and broaden the base of Investment in agro and information &
communication technology (ICT) sectors.

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3.5 Product and Services of ICB

Underwriting:

In order to raise term debt and equity from the primary market, the govt. bodies, enterprises,
corporation or companies may seek intermediary assistance from ICB in the form of
underwriting.

Private placement:

ICB is authorized to act as an agent of the issuers and investors for private placement of
securities. Under this arrangement, ICB places securities to individuals on behalf of the issuers
for which it charges fees.

Manager and banker to the issues:

To act as the manager to the public issue of shares and debentures ICB provides professional
services in respect to syndicate underwriting and bankers to the issue.

Mergers and acquisitions:

Companies willing to expand their business through mergers and acquisitions or to divest
projects that no longer fit into the present scale of operation may contact of ICB. ICB provides
professional services and advices.

Custodian and banker to the issues:

To act as the custodian to the public issue of open end & close end mutual funds, ICB provides
professional services. It also acts as the banker to the issuer and provides similar services through
the network of its branches. Fees in this regard are negotiable.

Bank Guarantee Scheme

ICB introduced Bank Guarantee scheme in 2002-03. ICB provided

(i) Bid Bond for enabling the business people to participate in any tender or bidding;

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(ii) Performance Bond for helping the business community to continue their business smoothly
by fulfilling their obligations promised by them to their clients; and

(iii) Customs Guarantee for solving different disagreements between the customs authority and
the business classes at the initial stage. The maximum limit of guarantee is Tk. 2.0 crore and
would be issued against at least 20 percent cash and 80 percent easily cashable securities or
against 100 percent cash margin. Re-guarantee from other financial institution is required for
guarantee against the amount exceeding Tk. 2.0 crore.

Consumer Credit Scheme

As part of business diversification program ICB has introduced “Consumer Credit Scheme” in
2003-04 looking at the need of various household commodities of different professionals of
government, semi-government, autonomous bodies and some established private sector
organizations. Under this scheme one can enjoy minimum of Tk. 1.0 lakh but maximum of Tk.
5.0 lakh credit facilities. The rate of interest on the loans reasonable and competitive

Lease Financing

ICB provides lease finance mainly for machinery, equipment and transport. ICB is in a position
to provide professional advice and financial assistance to the intending clients. The period of
lease, rental, and charge and other terms and conditions are determined on the basis of type of
assets and the extent of assistance required by the applicants. Good responses have been received
from the intending lessees since inception of this scheme in 1999.

ICB Unit Fund

It is on open-ended Mutual Fund through with the small and medium savers get opportunity to
invest their savings in a balanced and relatively low risk portfolio. ICB has so far declared
attractive dividends on units every year ranging from Tk. 11.5 to Tk. 25.0 per unit. Investment in
units enjoys tax benefits, amount being applicable as per law. However, under the ICB’s
restructuring program new unit certificates are being sold by ICB’s subsidiary company, the ICB
Asset Management Company Ltd.

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3.6 Subsidiary Companies of ICB
 ICB Capital Management Ltd. (ICML)

ICB Capital Management Ltd. is a fully owned subsidiary of Investment Corporation of

Bangladesh. The company obtained license from the Bangladesh Securities and Exchange
Commission to act as Issue Manager, Underwriter and Portfolio Manager and to carry out other
merchant banking operations under the Bangladesh Securities and Exchange Commission
(Merchant Banker and Portfolio Manager) Regulations, 1996. The company was incorporated
under the Companies Act, 1994 on 5 December 2000 and obtained registration from the
Bangladesh Securities & Exchange Commission on 16 October2001. The company started its'
operation from 01 July, 2002 upon issuance of gazette notification by the government. The
Company has a separate Board of Directors comprising 3 member from the private sector having
good academic qualification, expertise and experience in the field of business, finance and
investment. The Managing Director of ICB is the Chairman of the Board. The company has
excellent working environment being equipped with logistics and computer facilities.

ICML has been playing an important role in the development of capital market by carrying out
the functions of underwriting public issue of securities, portfolio management, issue
management and management of investment accounts with the objectives to help mobilize
savings and encourage and broaden the base of investment. The Company has emerged as one of
the fastest growing merchant bank in the country.

 ICB Asset Management Company Ltd.(IAMCL)

ICB Asset Management Company Ltd. a subsidiary of Investment Corporation of Bangladesh

(ICB) commenced its journey on 5th December, 2000 with the objective of professionally
managing investment funds.

The Company offers different types of investment schemes where savings are pooled for
investment in the capital market. These schemes are designed to hand out best possible benefits
to the investors at the lowest possible risk. Investment in the securities market, for that matter

15
any investment, carries risk. But there are many techniques to reduce such risk. The Company is
managed by a group of experts who have the necessary skills, knowledge and aptitude not only
to handle risk but also to ensure optimum return taking into consideration the environment
prevailing in the market.

ICB Asset Management Company Ltd., are in a unique position to handle risk-return profile of
an investment efficiently and prudently. It is now managing fifteen funds - ten close-ends Mutual
Fund and five open-end Mutual Funds known as Unit Fund. Some more new funds are in the
offing. The company is engaged in investment management; more specifically floating and
managing both open-end and closed end mutual funds. The company is dedicated towards
development of mutual fund industry as well as the capital market of Bangladesh.

 ICB Securities Trading Company Ltd.(ISTCL)

ICB Securities Trading Company Limited (ISTCL) is a subsidiary of Investment Corporation of

Bangladesh (ICB) under the provisions contained in Section-2 of the Companies Act, 1994. It
was formed as a part of the restructuring program of ICB under Capital Market Development
Programed (CMDP) initiated by the Govt. of Bangladesh (GOB) and the Asian Development
Bank (ADB) and in terms of power conferred in the ICB Ordinance. The company was
incorporated with the Registrar of Joint Stock Companies and Firms under the Companies Act
1994 on 05 December 2000. The company obtained license from the Bangladesh Securities and
Exchange Commission on 12 August 2002 to carry on the stock brokerage business. The
company started its operation on 13 August 2002 upon the issuance of gazette notifications by
the Government. The company is being operated pursuant to its own Memorandum and Articles
of Associations, BSEC's Rules and regulation and other applicable laws. It has independent
Board of Directors and separate management.

Corporate Service

 Provides online trading facilities for buying and selling securities listed with the bourses.

 Works as a full service Depository participant in the Central Depository System.

 Performs other brokerage services.

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 Trades Securities for its own portfolio as Authorized Dealer of DSE.

 Acts as selling agent under "Direct Listing Regulations 2006".

3.7 BSEC & Investment Banking

In addition to ICB, a number of commercial banks also carry out investment banking functions in
Bangladesh. The Bangladesh Securities and Exchange Commission (BSEC) has set the minimum
paid-up capital requirement for full-fledged merchant banks to Tk.25 crore. Through the
Merchant Bankers and Portfolio Manager Rules 1996, Bangladesh Securities and Exchange
Commission specified the minimum paid-up capital requirement for different merchant banking
activities. For issue management the minimum paid-up capital would be Tk.2.5 crore, for under-
writing issues and portfolio management, the minimum paid-up capital would be Tk.12.50 crore.
The BSEC has a code of conduct for issue managers, underwriters and portfolio managers and is
empowered to suspend or cancel the certificate of registration for its violation.

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 Chapter 4

Findings and Analysis

As lack of proper information it’s hard to find our assessment over investment bank influence.
Our findings on this are:

 Investment banking face problem as their activity are limited especially more in capital
market making. Only this type of activity didn’t help in playing effective role in
economic growth in greater prospect.
 Investment bank creates investment for industry and economic development which are
not adequate in amount. As our economy emerging their investment amount is very low
in term of that.
 Investment bank contributes very small in women empowerment.
 Investment banking activities on employment generation are significant but they can do
more better role in overall employment.
 Investment banking invests for larger and bigger industry, rather small industry as well as
individual.
 As global investment banking lies on technology, Bangladeshi investment banking needs
to keep pace with changing technology. But the adoption is not significant in number.

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 Chapter 5

Recommendation
We provide our recommendation in regarding our findings as follows:

 Pure investment bank should be introduced in our country.

 Investment banks should increase its manpower level. Efficient manpower should be
recruited with having strong academic background of the related subjects.
 Monthly/ quarterly training courses/workshops can be arranged for the selected employee
by the authority in order to promote their desired level.
 It is mandatory to create an efficient and justified analysts group for analyzing the
advantage & disadvantage of security portfolio.
 They need to make portfolio of diversified securities.
 Investment banks should increase the ranges of products and services to attract
customer’s interest.
 Government need to sanction more investment bank, so that more employment
opportunity creates as well as they can help in economic growth.

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 Conclusion
Investment banking is one of the most important organs of a countries financial structure and
play crucial role in the development of a country. In this capitalist world a countries development
depend upon the amount of investment it’s create to develop its economy. Bangladesh economic
development also depends greatly on it. As Bangladesh is a developing country and its want to
be a middle income country within year 2021its need a great support from investment banking.
Investment banking activities also need emphasis and monitor closely by a regulatory body and
Bangladesh needs to use this sector to generate more & more sustainable investment for
economic welfare of our country.

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 References
 http://www.investopedia.com/terms/i/investmentbank.asp
 http://en.banglapedia.org/index.php?title=Investment_Banking
 https://en.wikipedia.org/wiki/Investment_banking
 http://icb.gov.bd/apa_icb.php
 https://en.wikipedia.org/wiki/List_of_investment_banks
 http://www.icml.com.bd/
 http://icb.gov.bd/iamcl.php
 https://en.wikipedia.org/wiki/Economy_of_Bangladesh
 https://economictimes.indiatimes.com/definition/investment-banking
 https://www.academia.edu/20197247/Role_of_Investment_Banking_in_the_Economic_
Development_of_Bangladesh
 https://en.wikipedia.org/wiki/List_of_banks_in_Bangladesh
 https://www.bb.org.bd/fnansys/bankfi.php

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