The government has given a sovereign guarantee against Tk 3,000 crore in loans that the Investment Corporation of Bangladesh (ICB) has sought from the Bangladesh Bank (BB) so that it can play a bigger role in the capital market.

A sovereign guarantee is a government assurance of debt repayment. 

As the per a letter sent by the finance ministry to the BB, the government will repay the loan if the ICB fails to repay the central bank. 

If the ICB fails to repay the principal and interest, the government will repay it, the letter said.

The guarantee will remain valid for 18 months, according to the finance ministry. 

A part of the fund will be used to repay ICB depositors, who are demanding repayment. The rest will be utilised to support the stock market.

The finance ministry issued the guarantee after a meeting last month in the wake of a downturn in the stock market.