Charting ICB’s comeback: Debt relief, capital reform and market innovation

The framework reflects ICB’s efforts to strengthen its financial and operational sustainability in line with the broader objectives of the government’s 3R strategy.

Five decades of journey

After independence, trading on the Dhaka Stock Exchange resumed on 16 August 1976, following a five-year interruption. Just one and a half months later, on 1 October 1976, the ICB was established as the country rebuilt its economy.

With a nascent capital market, limited investment opportunities and growing demand for long-term industrial finance, mobilising savings for productive investment was a national priority.

Against this backdrop, the government established ICB under Ordinance No 40 of 1976 with four clear mandates: (1) to encourage and broaden the base of investment; (2) to develop the capital market; (3) to mobilise savings; and (4) to provide for matters ancillary thereto.

ICB also supported the supply of shares by providing equity support to industrial and manufacturing enterprises through underwriting and bridge financing.

Five decades on, Bangladesh’s economy and capital market have transformed significantly, yet the core objectives behind ICB’s establishment remain relevant. ICB’s journey thus reflects both the evolution of Bangladesh’s investment landscape and its continuing contribution to national economic development.

Contributions to industrialisation and capital market development

ICB’s role has extended beyond capital-market development to supporting industrialisation and entrepreneurship. 

From its early years, it provided long-term financial support to enterprises through equity participation, debentures, preference shares, underwriting, bridge finance, pre-IPO placement and lease financing for capital machinery – helping address the long-term funding needs of industries when conventional bank financing was often limited.

ICB has invested over Tk8,900 crore directly and Tk27,900 crore indirectly to support industrialization through equity, debentures, preference shares, and lease financing, backing major enterprises like Square, Beximco, ACI, and Titas Gas.

In June 1977, ICB launched the Investors’ Scheme, providing margin loans to small investors to purchase DSE-listed shares and ICB Unit Fund certificates. Benefiting around 77,000 investors, the scheme broadened retail participation and helped build a sustained demand base for securities.

Launched Bangladesh’s first closed-end mutual fund in 1980 and first open-end fund (ICB Unit Fund) in 1981. The ICB Unit Fund grew from Tk15 crore to Tk5,000 crore, distributing Tk6,563 crore in total dividends (including a historic 1,000% cash dividend in FY 2014–15).

As of April 2026, ICB and its subsidiaries manage 26 of the country’s 136 mutual funds, representing 51% (Tk6,801 crore) of the total mutual fund industry market value. Of the 136 mutual funds currently operating in the market, ICB serves as Trustee for 67 funds and Custodian for 59, reflecting its significant role in Bangladesh’s mutual fund industry. 

Current realities – key challenges 

A sound institutional strategy requires a realistic assessment of financial standing, cash flows, asset-liability structures, operational capabilities, risks and regulatory constraints to identify root causes and prioritise reforms.

A review of ICB reveals deep-seated financial, structural and operational bottlenecks. Key challenges identified include:

• High-cost borrowings, high interest expenses, unpaid principal and interest liabilities, and critical maturity mismatches between short- and medium-term borrowings and long-term investments.
• Severe liquidity constraints, non-performing project loans, substantial long-overdue FDRs with financial institutions, and a shortage of saleable securities.
• A substantial decline in portfolio market value relative to acquisition cost, significant provisioning shortfalls, and substantial capital locked in inactive, non-operational or unlisted companies.

Combined, these structural vulnerabilities severely erode ICB’s income-generating capacity, financial stability, ability to intervene in the market and scope for business expansion.

Loan burdens 

A comparative analysis of ICB’s financial position between FY11 and FY26 up to December showed that ICB’s liabilities, interest expenses and investment portfolio increased substantially, while its overall income remained largely unchanged.

Over the past one and a half decades, total borrowings increased from Tk2,341 crore to Tk14,043 crore, while annual interest expenses rose from Tk185 crore to Tk1,101 crore.

In contrast, annual gross income declined from Tk668 crore to Tk636 crore. Consequently, interest expenses now stand at 173% of annual income, or approximately 1.73 times total income.

During the same period, the investment portfolio at cost increased from Tk1,504 crore to Tk14,116 crore, while its market value stood at Tk8,609 crore as of December FY26, leaving an unrealised loss of Tk5,507 crore, compared with an unrealised gain of Tk1,519 crore in FY11.

The comparative position indicates a significant imbalance between ICB’s liability structure, asset base and income-generating capacity.

The sharp increase in high-cost borrowings and associated interest expenses has placed sustained pressure on liquidity and reduced the financial capacity available for new investment and sustainable income generation.

Integrated revival plan for ICB

To navigate its financial crisis, ICB has proposed an Integrated Financial Restructuring and Institutional Transformation Framework spanning three execution phases. The strategy focuses on debt reduction, capital restructuring, and modernising operations to restore long-term profitability.

1. Short-term plan: As the country’s only state-owned financial institution and merchant bank, ICB has formulated the following short-, medium- and long-term measures involving support from the Government and/or Bangladesh Bank.

• Proposed Tk10,000 crore in low-cost funding from the government
• Securitisation of Jamuna Bridge toll revenues

2. Medium-term plan

• Debt-to-equity swap and issuance of preference shares;
• Development and utilisation of new and diversified investment products, including Alternative Investment Funds (AIFs), Exchange-Traded Funds (ETFs), Sukuk, corporate bonds, and Systematic Investment Plan (SIP)/Target Investment Plan (TIP) products.

3. Long-term plan

• Expansion of the branch and service network, digital transformation, and development of a technology-driven modern ICB;
• Strategic partnerships and effective utilisation of ICB’s nationwide network;
• Introduction of a Real Estate Investment Trust (REIT).

Considering ICB’s prevailing financial and institutional circumstances, the proposed plan is not confined to any single intervention. Rather, it constitutes an integrated Financial Restructuring and Institutional Transformation Framework designed for implementation across three distinct phases—short, medium and long term.

The overarching objectives are to reduce the burden of liabilities, restructure the capital base, enhance operational efficiency, create new and sustainable sources of income, and ultimately transform ICB into a stronger, more resilient and modern financial institution.

The current situation is viewed not merely as a financial challenge but also as an opportunity to fundamentally restructure and modernise ICB.

ICB’s short-term recovery centres on securing Tk10,000 crore in 10-year, low-cost funding from the Government/Bangladesh Bank to replace existing high-cost borrowings (10.00-11.50%).

Of the funds, 70% will be dedicated to paying off high-interest borrowings to reduce debt pressure, while 30% will be invested in liquid, income-generating securities to boost recurring cash flow.

With the execution of the plan, the expected outcomes include annual savings of Tk450 crore in interest expenses and additional annual income of Tk350 crore through dividends and capital gains.

Total annual value creation is expected to reach Tk800 crore, resulting in a net improvement in ICB’s financial standing. The plan would also mitigate severe maturity mismatches between short-term borrowings and long-term investments, ease immediate liquidity constraints, and reduce reliance on expensive credit facilities.

It creates a sustainable pathway to return to profitability by Year 2 and significantly lower total debt over 10 years. The way forward ICB’s current financial challenges are the cumulative result of high-cost borrowings, elevated interest expenses, liquidity constraints, asset-liability maturity mismatches, and limitations in its existing investment structure.  

Against this backdrop, the proposed Tk10,000 crore long-term, low-cost funding should not be viewed merely as a financing measure to address ICB’s immediate financial pressures.  Rather, it represents a strategic initiative for ICB’s long-term financial restructuring, restoration of institutional capacity, and re-establishment of its developmental role in the capital market. If successfully implemented, the plan could strengthen ICB’s financial foundation, capital structure, and investment capacity.  

At the same time, it could contribute to increased liquidity and institutional participation in the capital market and create an opportunity for ICB to play a stronger role in reinforcing stability across the broader financial system of Bangladesh.

Jamuna Bridge toll revenue securitisation

To secure long-term, low-cost financing for large-scale infrastructure, a proposal has been developed to issue Sukuk Al-Ijarah backed by the future toll revenues of the Jamuna Bridge.

This initiative mobilises capital market financing while introducing a new Shariah-compliant investment product. Backing the securitisation with government-owned assets guarantees stable cash flows, opening opportunities for domestic and international investors – especially Islamic banks and financial institutions – while deepening Bangladesh’s Sukuk market.

Implementation of this initiative will yield substantial benefits for the Government, the financial sector, and ICB. It unlocks long-term domestic funding from future toll revenues while retaining public ownership of the asset and financing new development projects without reliance on bank loans or foreign debt.

Furthermore, it attracts private, institutional, and Shariah-compliant investors, thereby boosting capital market depth and liquidity.

The Sukuk also serves as an eligible asset for banks to meet Statutory Liquidity Requirement (SLR) mandates.

For ICB, it creates recurring fee-based income by establishing the institution as a market leader in issue management, trustee services, SPV administration, and financial advisory. Ultimately, this successful model offers a scalable blueprint for monetising other revenue-generating state assets across the country.

Sketch: TBS

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Sketch: TBS