The central bank has asked non-bank financial institutions (NBFIs) to create alternative sources of fund through boosting the bond market in Bangladesh.
The advice was made at a meeting with chief executive officers (CEOs) and managing directors (MDs) of NBFIs at the Bangladesh Bank (BB) headquarters in Dhaka on Tuesday with BB Governor Fazle Kabir in the chair.
The central bank also warned the NBFIs against returning any cheque unpaid for retaining clients' confidence as the lenders sought policy support to improve their liquidity position, according to meeting sources.
The regulator's warning came few days after announcement of liquidation of People's Leasing and Financial Services Limited (PLFSL).
Excepting few, most of the banks felt shy of dealing with NBFIs to avoid possible risks, according to insiders in the banking sector.
Some NBFIs were facing extra pressure on liquidity following banks' shyness to do transactions with them, they explained.
Now the situation started improving gradually, according to the market operators.
"We've suggested that the NBFIs create an alternative long-term source of fund for lowering dependence on banks gradually," a BB senior official told the FE after the meeting.
He also said the BB, the Ministry of Finance (MoF), National Board of Revenue (NBR) and Bangladesh Securities Exchange Commission (BSEC) already started making concerted efforts to develop the bond market.
Besides, a move was already taken to withdraw tax on zero coupon bonds, the central banker added.
He also said the senior bankers were advised at a bankers' meeting on July 21 to continue doing transactions with the NBFIs.
At Tuesday's meeting, the central bank assured the NBFIs of providing all kinds of support for ensuring financial stability in the country.
Talking to reporters, Arif Khan, MD and CEO of IDLC Finance Limited, said they sought liquidity support from the central bank considering the Reserve Bank of India's scheme in this connection.
"We've urged the BB to take initiatives along with MoF, NBR and BSEC to develop the bond market," said Mominul Islam, MD and CEO of IPDC Finance Limited while replying to a query.
He also said all the NBFIs already invested Tk 650 billion for developing infrastructural facilities and different industries of Bangladesh. "Our non-performing loans (NPLs) are lower than banks and credit rating is also good," he added.
Md Khalilur Rahman, chairman of Bangladesh Leasing and Finance Companies Association (BLFCA), told the reporters they would explain the overall situation of the sector by arranging a press conference shortly.
Meanwhile, the newly-appointed liquidator for PLFSL took over responsibility of the troubled NBFI formally and visited the headquarters of the financial institution on Tuesday.
Md Asaduzzaman Khan, deputy general manager of the BB's financial institutions department and markets, was appointed as the liquidator for the PLFSL.
Considering its fragile financial state, earlier on June 27 the finance ministry asked the central bank to liquidate the PLFSL and protect the interest of depositors.
Currently, 34 NBFIs are running their business across the country.
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