NBFIs demand lifting interest cap on deposit

Non-bank financial institutions (NBFIs) have urged the central bank to remove interest cap on deposits as they are struggling to keep pace with banks in mobilising deposits.

At a meeting with the central bank high-ups on Sunday, NBFI managing directors and CEOs said that although they have no objection to the 11% loan interest ceiling, it is difficult for them to get deposits at 7% interest.  

"This is the first meeting with the NBFI MDs and CEOs after the new central bank governor took office. From that perspective, today's meeting could be called a courtesy call. However, the NBFI representatives raised several issues as some of them said they are in trouble," Bangladesh Bank Spokesperson Sirajul Islam told journalists after the meeting.       

Sirajul said some of the NBFIs said they have been facing issues due to fragile consumer confidence.

"It is difficult for them to mobilise deposits at 7% interest as banks are offering almost the same deposit rates. Therefore, they requested the central bank to lift the deposit cap on deposits," he added.

On 18 April this year, the Bangladesh Bank imposed an interest rate cap on deposits and loans at NBFIs aligning with the ceiling now prevailing at banks. For the NBFIs, the central bank set a maximum of 7% on deposits and 11% on loans from 1 July.

Bangladesh Bank Governor Abdur Rouf Talukder asked the NBFIs high-ups to follow the central bank instructions closely, said Sirajul, adding, "If anyone puts any undue pressure on NBFI boards, the central bank will intervene if needed."

A NBFI managing director, who was present at the meeting, told The Business Standard that the Bangladesh Bank did not mention anything directly about lifting the interest cap on deposits. Rather, central bank top officials emphasised ensuring corporate good governance in the institutions.

Noting that the central bank has already taken steps to ensure good governance by appointing directors to the NBFIs, he also said that the central bank will come up with some more instructions to ensure good governance in the sector.