ADB Seeks Approval to Issue Taka Bonds for Bangladesh Development.

The Asian Development Bank (ADB) has requested the government’s approval to issue bonds via mobile money in order to mobilise investment for the development of Bangladesh, officials confirmed on Saturday.

The Manila-based lender plans to introduce these bonds in local currency on the domestic market initially. If successful, the bonds will then be made available to overseas investors.

ADB has submitted its bond issuance proposal to the Economic Relations Division (ERD) under the Ministry of Finance for approval. The government is now seeking feedback from various stakeholders on the proposal, officials said.

“The ADB’s proposal is currently under review, and we will provide our response soon,” a senior ERD official told The Financial Express. “We have already shared the proposal with relevant ministries and agencies. If they deem it beneficial for the country, we will proceed with the approval.”

Another ERD official stated that the proposal has been sent to the Finance Division, Bangladesh Securities and Exchange Commission (BSEC), National Board of Revenue (NBR), Bangladesh Bank, and the Financial Institutions Division for their opinions.

“After receiving their feedback, we will evaluate the responses and make a decision on behalf of the government,” he added.

ADB officials explained that the plan is to issue taka-denominated bonds initially in the local market, with the goal of expanding the initiative both domestically and internationally if it proves successful.

As Bangladesh requires significant funding for infrastructure development and with a rapidly growing private sector, this mobilisation of funds would support both public and private sector growth, an ADB official, who requested anonymity, explained.

ADB is the country’s second-largest development partner, providing approximately US$2.0 billion annually for public sector development. The bank also supports the private sector through loans aimed at business expansion.

The ERD official highlighted the previous experience of approving bonds for other multilateral agencies, such as the International Finance Corporation (IFC). The IFC issued taka-denominated bonds in the London market, but it was not very successful. As a result, the government is exercising caution with this new proposal.

“We will carefully scrutinise ADB’s latest proposal before granting approval,” he added. In November 2019, the IFC issued its first Bangladeshi taka-denominated bond, the “Bangla Bond,” on the London Stock Exchange, valued at Tk 800 million (around US$9.5 million at the time). The proceeds were used to finance the PRAN Group, a local food and beverage manufacturer, for business expansion and job creation.

In July 2022, the IFC also announced an investment of up to US$50 million (approximately Tk 470 crore) in Bangladesh’s first-ever domestic housing bond issued by BRAC Bank. This bond was aimed at providing affordable housing finance to low- and middle-income groups and supporting the development of the local long-term bond market.

The ERD official noted that ADB’s initiative is similar to the IFC’s, with the goal of mobilising funds domestically and reducing the private sector’s dependence on traditional bank loans.