The DSE also urged the Bangladesh Bank to reduce the Statutory Liquidity Requirement (SLR) for banks from existing 18 percent to 16 percent, saying that it will help the stock market to improve.

CEO of Dhaka Stock Exchange (DSE) Salahuddin Ahmed Khan said, "The present bearish trend is due to the liquidity crisis in the money market."

He was talking to a group of journalists after a meeting with newly appointed Chairman of Securities and Exchange Commission (SEC) Faruq Ahmad Siddiqi, who made his maiden visit to the DSE yesterday.

The DSE General Index yesterday declined by 17.25 points to close at 1424.71 points from previous trading day's 1441.96 points. It lost 252.64 points in the last three months while the All Share Price Index lost 177.05 points during the period.

The DSE CEO said most of the banks raised their interest rates on fixed deposit receipts (FDRs) last year, while the government also increased the interest rates on savings schemes by 1.5 percentage points in last December, which encouraged the small investors to invest in such schemes instead of investing in shares.

Besides, he continued, institutional investors like banks and financial institutions, which play important role in keeping the market vibrant, are less interested to put money in the market nowadays because of liquidity crisis in the banking sector.

"The institutional investors are also adjusting their margin accounts of their clients in line with the fall in share prices," he said. The margin accounts are used by share investors to borrow from the institutional investors to purchase shares.

However, the SEC chairman talking to the reporters after the meeting, said the slide in prices is not 'alarming'.

Asked about the reason for the current bearish trend, he said there are many factors contributing to the fall.

During the meeting, the SEC and DSE discussed framing of investment friendly regulations, resuming share trading on Saturdays and reorganising of the quota system to apply for primary shares.