The decision came at a meeting Bangladesh Bank held yesterday with top managers of non-bank financial institutions at the central bank headquarters.
The move aims to bring down FIs share market exposure within a limit of 25% of their equity.
Recently, banks have been allowed to convert their loans to subsidiaries, which are calculated as capital market exposure, into equity to help them adjust with excess exposure.
At the meeting, top managers of FIs have sought the same facility as some Fis failed to adjust their excess exposure to capital market within June this year set by Bangladesh Bank, said Mafizuddin Sarker, managing director of BD Finance.
Mafizuddin, also president of the Association for Non-Bank Financial Institutions, told reporters soon after the meeting that the central bank assured them of issuing a circular soon in this regard.
He said Bangladesh Bank will define a new time frame to adjust the excess loans or convert them into equity.
SK Sur Chowdhury, deputy governor of Bangladesh Bank said, BB will allow FIs to convert their loans into equity on a case-by-case basis after getting application from them.
Earlier, the investment was not monitored strictly, but recently, the central bank has taken a tough stance on the capital market exposure.
BB instructed all FIs to limit their excess exposure within the period of June, but some failed to do that. In this perspective, top managers sought an alternate option to adjust their excess exposure.
The decision will be capital market supportive as it will protect the market from selling pressure, said a senior executive of Bangladesh Bank.
In the meeting, FIs top managers also demanded a double service charge for clients to make more profit.
Currently, the clients have to pay 0.5% of loans or Tk2 lakh, whichever is minimal, as service charge, but FIs now demand that the service charge be hiked to 1% or Tk5 lakh.
Sur said FIs demanded double service charge for their clients on the pretext that the existing rate is not adequate for their business.
The central bank is yet to take decision in this regard, he said.
Governor Fazle Kabir chaired the meeting and focused more on ensuring good governance in FIs.
Managing directors have been asked to bring down their non-performing loan rate at a tolerable level, Sur said, quoting the governor.
Referring different anomalies committed by directors, FIs top managers have been asked to establish good governance in their organisation.
15 FIs are still in red zone in stress testing rating, the deputy governor said, adding that those were warned to come in green zone soon and their performance will be monitored strictly.
Admitting director’s interference and irregularities, Mafizuddin told reporters that they will try their best to establish good governance in their organisation but it is not possible to do overnight.