Financial Institution Division has asked Bangladesh Bank to take actions against the errant non-bank financial institutions in the backdrop of growing allegations against them.
Officials told New Age on Thursday that allegations including ‘failing’ to repay principal and interest to the client against their deposits and ‘harassing’ the clients while returning the deposit to the savers with profit.
FID has also been directing BB to check the non-performing loans of the commercial banks, especially the state-owned banks, but it issued a directive about NBFIs first time in recent past, said the officials.
They also said NBFI, also known as leasing companies, were advertising to convince the investors although it contradicted with the modus operandi of the companies monitored by the BB.
Another major allegation against the NBFIs is that they are trying to lure the investors with commitment of high interest rate in messages through mobile phones, the officials have said.
FID directive given on February 3 in an emergency letter was signed by its additional secretary Fazlul Haq.
Haq wrote that many clients were complaining to the elected representatives and high government officials against the NBFIs.
A total of 35 NBFIs are operating in the country, with total portfolio standing at Tk 85,000 crore.
Over 60 per cent of the portfolio or Tk 48,000 crore from depositors while 45 per cent of the amount are invested in the industrial sector, followed by small and medium-sized enterprises, housing, construction and others.
BB spokesman and executive director Md Serajul Islam on Saturday said he did not know about the letter issued by the FID for action against the errant leasing companies.
He, however, said the BB must give special focus on the directive since it was issued by finance ministry.
According to BB, the leasing companies cannot issue cheques, pay-orders or demand drafts. They also cannot receive demand deposits and get involved in foreign exchange financing.
Chairman of Bangladesh Leasing and Finance Companies Association Md Khalilur Rahman, while talking to New Age on Saturday, said the association had already cautioned a number of leasing company for their misdeeds.
He said the companies included ‘People Leasing, International Leasing and Investment Ltd’.
He regretted that ministry of finance had to issue directive to the BB for punishing the errant leasing companies when licence provider BB should have already started action against them.
According to Khalilur Rahman, the whole sector should not take the blame for only a few bad companies.
In 2017, BB detected that corruption and loan irregularities by board members pushed First Finance Limited, a non-bank financial institution, towards the brink of insolvency.
In 2015, the central bank removed five directors of People Leasing on a charge of financial corruption and formed a new board of the company that suffered loss of over Tk 1,000 crore in that year putting its depositors at risk.