Bangladesh Bank on Tuesday introduced an automated system to identify the weak and problem-ridden non-bank financial institutions considering their financial capabilities. The BB introduced the new system to detect the financial problems of the NBFIs in the quickest possible time which will protect the financial institutions from an unexpected business crisis.BB governor Atiur Rahman inaugurated the new automated system at the central bank headquarters while chief executive officers and managing directors of the NBFIs, and senior officials of the central bank were present.
Atiur said that the central bank would use the CAMELS (capital, asset, management, earning, liquidity and sensitivity) rating as input for the automated system.
After giving the input, the system will identify the weak and the problem-ridden NBFIs automatically, he said.
‘Through this initiative, the central bank will be able to protect the weak and the problem-ridden NBFIs from unexpected crisis as it will take proper measures immediately in accordance with the output result of the automated system’, he said.
He suggested the NBFIs to play their due role in developing the country’s bond market as such type of initiative would make their business vibrant.
The NBFIs should take initiative to issue long-term corporate bond as the measure would bring substantial amount of fund to the financial institutions, the BB governor said.
‘The NBFIs usually receive short-term deposits from the clients and they disburse long-term loans to the investors which create a tenure mismatch. The corporate bond would help avoid the tenure mismatch and the fund would be easily used in large volumes for large infrastructure projects’, he said.
BB deputy governor SK Sur Chowdhury said that some NBFIs did not follow the central bank’s rules and regulations properly.
The central bank will take punitive measures against the NBFIs which will not follow the BB’s regulations, he warned.
‘The NBFIs’ business are not the same like the scheduled banks. They should take strong measures to develop the bond and capital market. Unfortunately, they have failed to do it’, he said.
He asked the NBFIs to establish good governance in their board and management.
Bangladesh Leasing and Finance Companies Association president Asad Khan said that the NBFIs were now facing business crisis as the investment demand from the market was now suffering a stagnant situation.
‘Besides, the NBFIs usually face competition from the banks. The banks take 2.5 per cent service charge against the SME loans while we can take the service charge of only 0.5 per cent against the same loans due to the central bank regulation’, Asad, also managing director of Prime Finance, said.
The excessive regulations set by the BB have created an overburdened situation for the NBFIs, he said.
He sought a relief from the excessive regulations.
-With New Age input
