Deposit cap to be relaxed for healthy NBFIs: BB governor

The cap of Tk50 lakh deposit from an individual and Tk1 crore in joint names as dictated in the Finance Companies Act 2023 would not be applicable for healthy non-bank financial institutions (NBFI), Bangladesh Bank (BB) Governor Abdur Rouf Talukder assured the industry. 

In a meeting with NBFI chairman and managing directors, the central bank governor yesterday in principle agreed for a relaxed implementation of the new act so that it does not hurt the industry, said Md Golam Sarwar Bhuiyan, chairman of Bangladesh Leasing and Finance Companies Association (BLFCA).

He, however, could not share any concrete decision regarding how much of the new stringent act would be relaxed, to what extent, for which NBFIs. 

BB Executive Director and Spokesperson Mezbaul Haque told The Business Standard that there had been no decision yet. 

The central bank having the gazette of the new act sooner would come up with guidelines and some of the discretionary power granted to the central bank by the act might be reflected there for the sake of no hiccup in the industry, he added. 

The industry and the regulator would have several meetings in the coming days to work on the details of the relaxation, BLFCA Chairman Golam Sarwar said.

However, several sources after the meeting told TBS that the BB governor expressed the central bank's readiness to let the NBFIs having not more than 8% non-performing loans (NPL) enjoy the exemption for the cap on individual savers' deposits. 

Other than a handful top-tier NBFIs, most of the firms are struggling for their much higher NPL that came as a consequence of lack of governance and efficiency within the firms. 

Some NBFI representatives requested the BB governor not to include the NPL legacy problem, instead, they suggested the central bank to consider if an NBFI was improving in recent years. 

The stricter law already passed in the parliament, which made collateral-free loans, decades-long directorship, and too much shareholding by a family or group for excessive control over the board tougher, would be implemented softly for the readiness of the industry, said sources. 

NBFI directors who already have had their three terms in a row might get some extension, they added. 

For not holding a 15% share of an NBFI by a family, group or related parties, one additional year might be allowed by the central bank, on top of the two years mentioned in the act. 

Exclusivity of shareholding between banks and NBFIs, the BB expressed some rigidity initially and later upon strong persuasion agreed to find some intermediate solution for deserving parties.