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The central bank asks non-banking financial institutions (NBFIs) to stop inadmissible expenses for luring deposits and go by declared rates, officials say.
The nonbanks have also been instructed to publish information relating to interest rates on deposits regularly on their websites, according to a notification issued Sunday by the Bangladesh Bank (BB).
The latest regulatory move comes after observing that some of the NBFIs have collected deposits offering different types of commissions, which is unethical as well as unacceptable.
“We’ve been informed that some NBFIs have been collecting deposits offering commissions which pushed up cost of funds,” a senior BB official told the FE while explaining the main objective of the notification.
Higher interest rates have also been responsible for the rising trend in classified loans in the NBFIs sector, according to the central banker.
The volume of non-performing loans (NPLs) in the country’s NBFIs increased by nearly 14 per cent to Tk 117.57 billion as on September 30 last calendar year from Tk 103.28 billion three months before despite providing policy support by the central bank.
“We’re trying to ensure discipline in the sector through restoring confidence of the depositors,” he says while replying to a query.
Md Nurul Amin, chairman of the FAS Finance and Investment Limited, welcomes the BB moves, saying that it will help establish corporate governance in the NBFI sector.
Mr Amin, also former chairman of the Association of Bankers, Bangladesh (ABB), says some NBFIs had collected deposits through offering commissions when they faced pressure on liquidity. “But it’s not an ethical practice.”
Some NBFIs are now facing different types of problems as large-scale scams were committed in recent years mainly for a lack of corporate governance, industry-insiders say.
Prashanta Kumar Halder, also known as PK Halder, who is believed to be living in Canada after fleeing Bangladesh, is one of those responsible for the ongoing vulnerable situation of the NBFI sector.
PK Halder, a former managing director of NRB Global Bank and Reliance Finance Limited, allegedly embezzled more than Tk 35 billion from four NBFIs, creating a precarious situation for the entire NBFI sector of Bangladesh.
Currently, 35 NBFIs are operating their business activities across the country.
(FE)
