BB governor seeks plans to reform NBFIs

Bangladesh Bank Governor Ahsan H Mansur yesterday urged the top brass of non-bank financial institutions (NBFIs) to submit reform plans.

He made the call in a meeting with the managing directors of different NBFIs at the central bank headquarters in Dhaka yesterday. Top officials of Bangladesh Bank were also present.

Some NBFIs are in dire straits due to various reasons, including mismanagement, irregularities in disbursement of loans, and defaulted loans.

The rise in defaulted loans has created a capital crunch in most financial institutions, according to industry insiders.

Against that backdrop, the central bank governor asked the top officials of NBFIs to provide a concrete plan to reform the entire sector. Initiatives will be taken according to those plans, he added.

Meanwhile, leaders of the NBFIs urged the governor to provide various policy-related support to address the crisis.

Bangladesh Bank Executive Director and Spokesperson Husney Ara Shikha said they spoke to the governor about the problems plaguing financial institutions.

Many institutions are in poor condition. Therefore, to advance this sector, they want the kind of policy support that is given to banks, she said.

According to the Bangladesh Bank data, defaulted loans of non-bank financial institutions increased to nearly Tk 23,208 crore at the end of 2023. The amount of disbursed loans in this sector stood at about Tk 73,560 crore, which means about 32 percent of disbursed loans turned sour.

At present, 35 NBFIs are operating in the country. Out of these, three are government-owned, 12 are under domestic-foreign joint ownership and the rest are privately owned.

However, most are in liquidity crises.

The situation is such that some institutions are unable to return money to depositors, according to analysts.

At least 10 of these financial institutions are now in critical condition, they added.