Margin loan rules for stocks eased further

The Bangladesh Securities and Exchange Commission (BSEC) has further relaxed the conditions related to securing margin loans for buying stocks in a bid to boost the country's ailing capital market.

Last month, the regulator issued an order, stating that brokers and merchant banks will be allowed to provide margin loans to buy stocks even if the company's price-to-earnings (PE) ratio is 50, up from than the previous limit of 40 if firms meet two conditions.

First, the company will have to have a paid-up capital of more than Tk 50 crore. Second, it will have had to feature in the "A" category of the market for three consecutive years.

The BSEC yesterday issued another order to ease the first condition, saying that customers can get margin loans for the stocks of a company that has a paid-up capital of more than Tk 30 crore.

Paid-up capital is the amount of money a company has received from shareholders in exchange for shares of stock.

The PE ratio is the ratio for valuing a company that measures its current share price relative to its per-share earnings.