NBFIs to cut in pvt banks\\\' share

 At least 13 non- banking financial institutions (NBFIs) have been allowed to receive a part of the development and non-development funds of the government and autonomous bodies as deposits, officials said.
The Banking and Financial Institution Division of the Ministry of Finance recently issued a notification to this effect.
Beneficiaries hailed the step as "historic" which fulfilled a longstanding demand of the financial sub-sector.
The measure is expected to help the non-banks to cut down their dependence on bank loans and call money to meet their liquidity requirements, they added.
According to the notification, a maximum of 20 per cent of development funds received by different autonomous and semi-autonomous bodies can now be deposited with the NBFIs.
Besides, the government, semi-government, autonomous and semi-autonomous organisations are free to keep 25 per cent of their respective funds with the private banks or 13 designated NBFIs or with both.
The facility for taking the deposits in the case of the selected NBFIs will remain valid for two years from the date of announcement.
The NBFIs that have been selected for receiving the deposits are: Bay Leasing, DeltaBrac, First Finance, IDLC Finance, Industrial and Infrastructure Development Finance, Industrial Promotion and Development Co, Islamic Finance and Development Ltd, LankaBangla Finance, National Finance, National Housing Finance and Investment, Phoenix Finance, United Finance and Uttara Finance.
Presently, the country's private commercial banks are only allowed to take 25 per cent of the fund, an official concerned said.
Some 80 per cent of ADP funds and 75 per cent funds of the government, semi-government, autonomous and semi-autonomous organisations are kept in the state-owned banks.    
The NBFIs had long been seeking to get government deposits to overcome their fund shortages. At last, the government has given "a historical shape" to the longstanding demand, which will help boost the NBFIs' overall operations, a high official of one private NBFI said.
Talking to the FE Wednesday, Bangladesh Leasing and Finance Companies Association (BLFCA) Chairman Asad Khan expressed the hope that the cost of fund would come down in the near future following the move. But, he hastened to add, this would only depend on getting deposit from the government agencies concerned by the NBFIs.
"We have reduced the cost of fund of the NBFIs and the effort will continue in the future to bring the same further down," he said.
The NBFIs are mostly dependent on bank loans and call money to meet their liquidity necessities. But the banking sector is not in a position to extend the required funds to the NBFIs, a top boss of another NBFI told the FE.
"The NBFIs frequently face difficulties because of liquidity crisis. I am hopeful that the inclusion will be able to meet their fund deficit," he added.
The non-banks are allowed by the Bangladesh Bank to collect fixed deposit from individuals and organisations for three months.
Volume of loans and advances, including leasing, from the NBFIS amounted to some Tk 420 billion in the calendar year 2014, according to the BLFCA.
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