Total issued capital on Bangladesh’s capital market crossed BDT 1 trillion at the end of March 2026, reaching BDT 1.03 trillion or $8.41 billion (at the exchange rate of BDT 122.75 to the dollar), according to central bank data. Measured against the country’s gross fixed capital formation, however, that entire equity stock amounts to barely 6 percent.
Gross fixed capital formation — the national measure of investment in infrastructure, buildings and machinery by government, private firms and foreign direct investors — stood at $138.19 billion last year, according to World Bank data. The sum raised through the capital market over five full decades therefore represents a sliver of the fixed capital built each year.
Bangladesh’s capital market traces its origins to 1956. Formal trading began in 1976, after independence, giving the market a history that now spans five decades. Yet it remains a negligible source of industrial capital. Relative to the size of the economy, no other nation’s capital market supplies so little finance. Adding to the distress is the fact that no new company has entered the market through an initial public offering in more than two years.
Bank lending dominates instead. By December 2025, the banking sector had pumped BDT 7.65 trillion into industries, equal to 43 percent of all loans. That included over BDT 4.23 trillion in term loans and BDT 3.41 trillion in working capital — more than seven times the industrial funding intermediated through the stock market.
Non-performing loans reached BDT 5.44 trillion at the same date, and nearly 31 percent of those bad loans sat in the industrial sector. Banks have strained their balance sheets by using short-term deposits to underwrite long-term industrial loans. Experts argue that channelling more long-term capital through the stock market would ease pressure on bad loans and sharply reduce companies’ cost of funds.
Bangladesh’s capital market remains largely equity-driven even as such markets across both advanced and developing economies have diversified deep into bonds, derivatives, commodities and infrastructure financing. Dhaka has debated securitising infrastructure projects through the capital market for years. None of those discussions has ever borne fruit. But the finance and planning minister, Amir Khasru Mahmud Chowdhury, recently signalled government interest in the idea during a budget briefing with journalists, saying securitisation was under active policy review.
The last companies to raise money through initial public offerings were nine firms that collected BDT 8.41 billion in the 2023–24 fiscal year, Dhaka Stock Exchange data show. Since the final quarter of that year, not a single new company has listed. Market participants say an IPO drought of this length is unprecedented. A sustained downturn that began in early 2022 lies behind the freeze. Entrepreneurs see little incentive to launch an IPO when a falling market depresses the price they can command for their shares. Past episodes of stock market manipulation have also driven many companies away. When the former interim government took power after the political upheaval of August 2024, many anticipated a market recovery. That recovery never materialised, and business owners held off on fresh investment amid the political and economic uncertainty that followed.
The election of a BNP-led government in February this year briefly kindled fresh hopes. Indices and turnover rose on the expectation of a shift. Within days, however, the outbreak of the US–Iran war in the Middle East disrupted momentum in the stock market. That dislocation has done nothing to encourage entrepreneurs to launch IPOs to fund fresh business expansion.
Riad Mahmud, president of the Bangladesh Association of Publicly Listed Companies and managing director of National Polymer Industries, told Bonik Barta: “Our capital market is deeply underdeveloped. But that’s just stating the obvious. On top of that, confidence remains fragile. When only a handful of companies misuse IPO proceeds, the reputational damage ripples outward. There’s also no real incentive to list a company in the stock market.”
He said the economy’s condition left no alternative but to turn to equities for long-term capital. “Banks are in no position to provide rapid finance, nor should they. That leaves us with no option but the stock market. There’s no other way to overcome the current economic distress. We’re waiting to see what sort of policies the government adopts.”
Mahmud pressed for a scope to use IPO proceeds for restructuring corporate bank loans, saying, “Currently, up to 30 percent of IPO funds can be used to repay bank loans. Why not raise this to 90 percent? We have already urged the BSEC to lift the ceiling. Servicing high-cost debt with equity capital would lighten companies’ cost burdens and strengthen their balance sheets.”
Past IPO listing irregularities have left the initial public offering process deeply debated. Over a decade and a half, 149 companies raised more than BDT 110 billion through IPOs — the bulk of it during the tenure of the Khairul commission. Many of those issuers are now financially enfeebled. Some have halted production entirely. IPO proceeds were diverted to unrelated uses. Sponsors siphoned cash from the stock market by orchestrating artificial run-ups in share prices. Pre-IPO placements, too, stand accused of facilitating large-scale extraction: influential individuals were often gifted placement shares at no cost, then sold them at a premium once the company listed. A sprawling racket of manipulation and fraud enveloped the entire IPO pipeline.
Md Abul Kalam, director and spokesperson of the Bangladesh Securities and Exchange Commission, told Bonik Barta that easy bank credit had blunted companies’ appetite for equity. Past issuers, he added, frequently failed to deploy IPO funds on schedule. “The question therefore remains whether those companies genuinely sought capital for business expansion.”
The regulator’s stricter enforcement of securities laws after the 2024 political transition may have deterred both companies and issue managers, Kalam said. “The commission has recently amended the IPO rules, making the process of pricing shares more attractive. We’re hopeful that companies will apply for IPOs in the coming days to raise funds from the capital market.”
Market analysts flag a deeper obstacle: a crippling shortage of investable stocks. The Dhaka Stock Exchange lists 645 securities. Only 360 of them are companies. The remainder comprises 225 treasury bonds, 16 corporate bonds, eight debentures and 36 mutual funds. Among the 360 listed firms, 32 have suspended production and auditors have classified the business outlook of another 38 as high-risk. Many more remain commercially weak. There is also a persistent trend of sharp, abnormal rises in the share prices of companies that have halted production or are facing existential distress.
Domestic and foreign investors cannot, in such an environment, muster the confidence for sustained long-term commitments. When participation thins, entrepreneurs themselves recoil from the market, fearing they will not secure fair value for their shares.
“Bangladesh offers bank credit on terms no other country can match,” Saiful Islam, president of the DSE Brokers’ Association of Bangladesh, told Bonik Barta. “The wretched consequence is that many banks and financial institutions are now fighting for survival. Had we built the capital market at the same pace, this distress would not exist. Prioritising the market must shift from rhetoric to action — capital has to be raised through the capital market. Any new project or expansion should carry a rational split between bank and market finance. Sixty percent from banks and forty percent from the stock market, for instance. Banks, squeezed by liquidity, can no longer meet entrepreneurs’ funding needs. So raising capital from the stock market must be made compulsory. In the current situation, there’s simply no other way.”
Foreign investment, a benchmark of market maturity and strength, illustrates how deep the atrophy runs. Net foreign portfolio investment peaked at BDT 67.9 billion in the 2013–14 fiscal year. After a brief recovery in 2016–17, the trend turned relentlessly downward. It has stayed negative since 2020–21, sinking to an outflow of BDT 16.8 billion in the 2024–25 fiscal year and a further $82 million in the July–February window of the current 2025–26 fiscal year.
The pipeline for fresh listings has now been dry for more than two years — an IPO drought that merchant bankers pin on a tangle of regulatory and structural obstacles. Merchant banks, which helps companies through the listing process, bear the formal duty of ensuring applicants comply with securities law.
Iftekhar Alam, president of the Bangladesh Merchant Bankers Association, said the financial system’s overwhelming bank-dependence drives every company to a credit officer first. “The IPO process is so protracted that funds are never available when needed. Before 2015, there was some flexibility. Then came rules requiring a third of IPO proceeds to repay debt, along with the corporate governance code. Many companies simply lost interest.”
Noting that Bangladesh’s business structure remains largely family-centred, Alam added: “Precisely because control is so concentrated, many entrepreneurs have never developed the instinct to list. Once a company goes public, the cost of meeting governance and compliance rules often feels greater than the benefit of staying private. That is another powerful disincentive.”
The political transition in August 2024, the Russia–Ukraine war, flooding and broader economic weakness combined to make any IPO impractical, the BMBA president added, while regulators were also rewriting the rulebook. “The new BSEC framework changes the valuation method so that companies will secure better pricing than before. We’re working to convince companies to come forward. BSEC is saying they’re trying to clear the remaining obstacles. I expect a number of IPOs to enter the market soon.”
Bangladesh’s market capitalisation stands at a mere 6.22 percent of GDP, far below even crisis-hit Sri Lanka which is at 26.39 percent and Pakistan’s 16.50 percent. Other Asian countries such as India, Thailand, Vietnam, Indonesia, the Philippines and Malaysia have their ratios far higher.