Central bank convenes meeting with NBFI chiefs tomorrow
Sunday, 12 August 2007
FE Report
The country's non-banking financial institutions (NBFIs) are gradually expanding their areas of operation and also changing their respective names in line with the services they intend to provide to the customers.
At least three NBFIs have already altered their names with emphasis on finance and investment instead of only leasing, indicating diversification of their business, sources in the industry said.
"This is a trend that indicates expansion and diversification of the NBFIs' operations to meet the varied needs of the entrepreneurs," former Chairman of the Bangladesh Leasing and Finance Companies Association (BLFCA) A Quadir Choudhury told the FE Saturday.
Quadir, who is also Managing Director of the Phoenix Finance and Investment Limited, said that some NBFIs have already been able to achieve the capital adequacy and other criteria in the regional level.
"We are now investing in different sectors, including housing, term lending, small and medium enterprises (SME) and portfolios investment as part of our diversification plans," he observed.
The NBFIs, which have already changed their names' are: the Phoenix Finance and Investment Limited from Phoenix Leasing Company Limited, the IDLC Finance Limited from Industrial Development Leasing Company of Bangladesh Limited (IDLC) and the Premier Leasing and Finance Limited from Premier Leasing International Limited.
Besides, the Bangladesh Bank (BB) has called a meeting with the managing directors of the NBFIs, scheduled for tomorrow (Monday), to review the overall situation in the sector.
"The chief executives of NBFIs will be able to discuss their problems in the meeting," a BB senior official told the FE.
Sources, however, said a proposal to change the name of its association - the Association of Financial Institutions, Bangladesh - is under consideration in the ministry of commerce.
The Indonesia-based Asian Leasing Association, the regional apex body of the NBFIs, has already changed it name to the Asian Leasing and Financial Association (ALFA).
Lease financing, term lending and housing loan constituted 95.59 per cent of the total financing of all NBFIs up to December 31, 2006, according to the Bangladesh Bank (BB) statistics.
The shares of leasing, loan, housing, and other assets in the total portfolios of NBFIs were 44.96 per cent, 35.00 per cent, 13.99 per cent and 1.65 per cent respectively in December last.
"The NBFIs have been growing quite rapidly over the last couple of years," the central bank said in its financial sector review, released recently, adding that the major business of most NBFIs is leasing. Only two NBFIs have focused on housing finance.
Meanwhile, the central bank has ordered the NBFIs to appoint their chief executive officer, managing director and advisers for a minimum three years tenure.
The chief executive officer, managing director and advisors were appointed earlier for a maximum five-year period but there was scope to make such appointments for a lesser period.
The BB's latest move on appointment for a minimum three-year tenure was hailed by the officials of the NBFIs who said that the chief executives would get enough time for policy-making as well perform other functions of the financial institutions.
Currently, 29 NBFIs are operating their business in the country.
The country's non-banking financial institutions (NBFIs) are gradually expanding their areas of operation and also changing their respective names in line with the services they intend to provide to the customers.
At least three NBFIs have already altered their names with emphasis on finance and investment instead of only leasing, indicating diversification of their business, sources in the industry said.
"This is a trend that indicates expansion and diversification of the NBFIs' operations to meet the varied needs of the entrepreneurs," former Chairman of the Bangladesh Leasing and Finance Companies Association (BLFCA) A Quadir Choudhury told the FE Saturday.
Quadir, who is also Managing Director of the Phoenix Finance and Investment Limited, said that some NBFIs have already been able to achieve the capital adequacy and other criteria in the regional level.
"We are now investing in different sectors, including housing, term lending, small and medium enterprises (SME) and portfolios investment as part of our diversification plans," he observed.
The NBFIs, which have already changed their names' are: the Phoenix Finance and Investment Limited from Phoenix Leasing Company Limited, the IDLC Finance Limited from Industrial Development Leasing Company of Bangladesh Limited (IDLC) and the Premier Leasing and Finance Limited from Premier Leasing International Limited.
Besides, the Bangladesh Bank (BB) has called a meeting with the managing directors of the NBFIs, scheduled for tomorrow (Monday), to review the overall situation in the sector.
"The chief executives of NBFIs will be able to discuss their problems in the meeting," a BB senior official told the FE.
Sources, however, said a proposal to change the name of its association - the Association of Financial Institutions, Bangladesh - is under consideration in the ministry of commerce.
The Indonesia-based Asian Leasing Association, the regional apex body of the NBFIs, has already changed it name to the Asian Leasing and Financial Association (ALFA).
Lease financing, term lending and housing loan constituted 95.59 per cent of the total financing of all NBFIs up to December 31, 2006, according to the Bangladesh Bank (BB) statistics.
The shares of leasing, loan, housing, and other assets in the total portfolios of NBFIs were 44.96 per cent, 35.00 per cent, 13.99 per cent and 1.65 per cent respectively in December last.
"The NBFIs have been growing quite rapidly over the last couple of years," the central bank said in its financial sector review, released recently, adding that the major business of most NBFIs is leasing. Only two NBFIs have focused on housing finance.
Meanwhile, the central bank has ordered the NBFIs to appoint their chief executive officer, managing director and advisers for a minimum three years tenure.
The chief executive officer, managing director and advisors were appointed earlier for a maximum five-year period but there was scope to make such appointments for a lesser period.
The BB's latest move on appointment for a minimum three-year tenure was hailed by the officials of the NBFIs who said that the chief executives would get enough time for policy-making as well perform other functions of the financial institutions.
Currently, 29 NBFIs are operating their business in the country.