NBFIs allowed to collect fixed deposit for 3 months

The central bank has relaxed its rules, allowing the non-banking financial institutions (NBFIs) to collect fixed deposit from individuals and organisations for three months instead of six months earlier, officials said Sunday.
Under the amended rules, the NBFIs are allowed to collect deposit from individuals and organisations for three months, which will not be allowed premature encashment.
The Bangladesh Bank (BB) issued a circular in this connection Sunday, and asked the chief executives and managing directors of the NBFIs to follow the amended rules for deposit collection.
"We've relaxed the rules relating to collection of fixed deposit, both from individuals and institutions, in line with the NBFIs' requirement," a BB senior official told the FE.
He also said the NBFIs should introduce innovative products to boost their business activities through attracting more clients.
"We expect that the cost of fund will decrease following the BB's latest move," the central banker noted.
On March 9, 2010, the BB relaxed its rules allowing the NBFIs to receive fixed deposit from individuals and institutions for six months instead of 12 months earlier.
Currently, 31 NBFIs are running their business in the country.
The Bangladesh Leasing and Finance Companies Association (BLFCA) welcomed the BB's latest move saying that it would help to improve liquidity position of the NBFIs.
"The cost of fund will come down in the near future following the relaxation of rules relating to collect deposit from both individuals and institutions. Three month limit enough for us to improve our liquidity position," Asad Khan, chairman of the BLFCA, told the FE
The BLFCA earlier recommend the central bank to ease conditionality for collection of fresh funds from both individuals and organisation to meet the growing demand of their funds.