Bars release of more than 50pc of total portfolio to a single product
Bangladesh Bank on Wednesday said a non-bank financial institution could not release more than 50 per cent credit of their total portfolio to a single product.
The BB issued a guideline to all NBFIs saying that the credit limit would be extended up to 80 per cent only for those institutions which are providing credit solely to one particular specialised area such as SME, housing, agriculture and infrastructure development.
The BB on the day also issued a circular along with the guideline saying that the new directions on products and services would help the NBFIs to formulate a general framework with a view to removing the existing inconsistencies and discrepancies for the products and services.
The BB asked the NBFIs to submit a comprehensive report on the ‘product and service risk management’ to the central bank in every year by December 31.
In the annual report, the NBFIs will have to include the list of existing products and services, current assessment of product and service risks and any change in the direction of risks.
The BB defined in its guideline 10 types of asset-side products — corporate finance, consumer finance, agriculture finance, SME finance, housing and real estate finance, equity finance, syndication finance, capital market investment, bonds and others.
List of all types of fees and charges related with the loans and leases must be kept in a place that is easily visible to the clients in all branches of the NBFIs, the BB guideline said.
The fees and charges mentioned in that list must be strictly followed.
The NBFIs will have to charge at an actual rate for all kinds of legal fees, redemption or cancellation of power of attorney of mortgaged.
Grace period will be allowed to a new business project or a project of an existing business that will require some time to generate enough cash for repayment. The maximum limit of the grace period will not exceed one year from the date of final disbursement.
In case of large industrial projects or syndication financing, grace period can be extended up to another six months.
For the asset-side products and services, there should be at least three-level approval committees in the NBFIs, which are management-level committee, executive committee and board of directors.
There must be a written policy statement regarding approval authority and it will have to be followed strictly.
The BB defined four types of liability-side products of the NBFIs which are savings scheme, term deposit scheme, wealth builder scheme and issuance of bonds.
The NBFIs must disclose all information regarding their products and services and make them available to clients.
The NBFIs will have to contain the information of products and services in written form such as in brochure, catalogue and web site.
After the issuance of the guidelines, the NBFs must use ‘clientele acknowledgement forms’ as per direction of the BB for the new clients and depositors.
The form must be acknowledged by the customer concerned prior to the first disbursement of the borrowed fund in case of asset-side products.
The CAFs must be kept in the respective files of the client.
Any discrepancy or disputes found with these forms must be given utmost attention by the responsible unit or department of the NBFI and should try to resolve those on urgent basis.
-With New Age input
