The central bank has introduced a guideline for identification of weak and problem-ridden non-banking financial institutions (NBFIs) aiming to monitor and supervise the financial market in a better way.
The mechanism of the guideline will detect the weak and problematic NBFIs automatically, officials said.
In the process, the central bank will be able to warn those weak and problematic NBFIs in advance.
The activities of NBFIs will be supervised and monitored with special care if those are identified as weak or problematic, according to the officials.
The central bank will depute an observer to monitor and supervise their activities closely in line with the guideline.
"It's a tool for ensuring good governance in the country's financial sector," Bangladesh Bank (BB) Governor Atiur Rahman said while inaugurating the automated system for assessing the financial health of the NBFIs Tuesday.
Earlier in 2004, the BB prepared guidelines for monitoring early warning system and problematic banks.
The central bank chief also asked the chief executive officers (CEO) and managing directors of all NBFIs for taking necessary measures to ensure good governance in their sector.
The CEOs and managing directors of NBFIs have been advised to take preparation for issuing local bond to finance long-term investment projects. "The NBFIs should consider issuing local bond for financing long-term projects particularly infrastructure ones for avoiding their mismatch of funds," Dr Atiur Rahman noted.
The BB governor also advised the CEOs and managing directors of NBFIs to play more active role for development of the country's secondary securities market.
About the new automated system, SK Sur Chowdhury, deputy governor of the BB, said the system combines elements of qualitative assessments and quantitative evaluations.
"The system not only can show the overall performance of a financial institution but also can project the performance of a particular aspect of that institution," Mr. Sur noted. Moreover, a colour matrix has been applied which helps understand easily the performance movement of an institution chronologically, he added.
Asad Khan, chairman of the Bangladesh Leasing and Finance Companies Association (BLFCA), urged the central bank for taking necessary measures to avoid duplication of the same information that are being sent to different departments of the central bank.
The BLFCA chief welcomed the BB's latest move, saying that this is very timely and useful tool for the NBFIs. "It will help detect actual financial health of the NBFIs.
Among others, Nazneen Sultana, deputy governor of the BB and M Mahfuzur Rahman, executive director of the central bank, spoke on the occasion.
