• Tuesday, Jan 25, 2022
  • Last Update : 03:32 am

BB asks NBFIs not to dishonor depositors' cheques

  • Published at 09:40 pm July 23rd, 2019
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The Bangladesh Bank logo is seen at its office building in capital Dhaka Mehedi Hasan/ Dhaka Tribune

BB Governor Fazle Kabir in a meeting at Bangladesh Bank headquarters with NBFIs also asked top executives of NBFIs to comply with the latest directive to shield the interest of depositors

Bangladesh Bank (BB) on Tuesday asked non-bank financial institutions (NBFIs) not to dishonor any cheques of depositors for the sake of restoring public confidence in the NBFIs.

BB Governor Fazle Kabir in a meeting at Bangladesh Bank headquarters with NBFIs also asked top executives of NBFIs to comply with the latest directive to shield the interest of depositors, and keep NBFIs in normal business.

The governor chaired the meeting, where Bangladesh Leasing and Finance Companies Association Chairman Md Khalilur Rahman, among others, was present.

Top executives of non-bank financial institutions sought intervention of the central bank in containing the banks’ growing deposit withdrawal pressures from the NBFIs.

They came up with the plea in the wake of public distrust following the regulatory move to liquidate the crisis-hit People’s Leasing and Financial Services that subsequently resulted in fund withdrawal by the banks, institutes and individuals from the NBFIs.

Apart from the People's Leasing and Financial Services, a number of other NBFIs have been failing repeatedly to pay back depositors’ money in time, it is alleged.

Speaking on the deposit withdrawal pressure from the banks in recent times, IDLC Finance Managing Director Arif Khan said: "We have sought support from the central bank in this regard."

"Besides, we have engaged in dialogue with the banks so that they continue the existing finances involving NBFIs," said Arif, adding, ‘pulling funds at once from the NBFIs will not be positive for the sector."

He also expected that the banks would continue the existing credit facilities issued to the NBFIs.

Arif, also a former commissioner of Bangladesh Securities and Exchange Commission, said that there was some pressure from banks in the first few days [after the BB’s move to liquidate People’s Leasing and Financial Services Limited] but the banks were reducing the pressure gradually.

Asked whether there was any proposal from the well performing NBFIs to support the ailing NBFIs, the IDLC MD said: "We have come here for support from the central bank and the government so that they come forward to help us."

The issue of fund withdrawal by the banks from NBFIs was also raised at the bankers' meeting held on Sunday where the BB instructed banks not to withdraw the existing deposits with the NBFIs, BB officials said.

At yesterday’s meeting, the central bank also instructed NBFIs to explore long-term sources like bonds so that the financial institutions could get rid of bank dependency.

‘The NBFIs also proposed that the central bank should come forward with schemes so that we can contribute to salvaging the weak financial institutions,’ said IPDC Finance Managing Director and Chief Executive Officer Mominul Islam.

There should be short-term, mid-term and long-term measures for the recovery of the sector, he said.

"The central bank also assured us of policy support for ensuring stability in the financial sector," Mominul said.

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