Writing off bad debts behind negative equity is crucial to resolving a decade-long issue affecting market growth. Despite repeated time extensions, market intermediaries have failed to meet provisioning requirements against unrealized losses in margin accounts. The outstanding negative equity rose from Tk 66.3 billion in September last year to Tk 97 billion by October this year. Stockbrokers now propose another extension until 2030 to gradually increase provisions to 100%. However, experts argue that extensions won’t solve the problem. The Bangladesh Securities and Exchange Commission (BSEC) is demanding a permanent solution, including write-offs. Parent companies must address the issue by allowing write-offs, as margin loans were mostly disbursed by subsidiary merchant banks and brokerage firms. The DBA has proposed a phased provisioning plan, but skepticism remains due to past inaction. Effective management and regulatory measures are essential to alleviate the negative equity burden and restore market stability.
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