BB questions three non-banks’ fierce SMS marketing

Bangladesh Bank yesterday sent show-cause letters to three non-bank financial institutions (NBFIs) over their aggressive attitude in mobilising deposits, which was a breach of rules.

The three are LankaBangla Finance, Prime Finance and Investment, and First Finance.

They have been persistently sending SMS (short message service) to clients' mobile phones for long in an attempt to mobilise deposits with offers of high interest rates ignoring a central bank notice.

The June 2018 notice asked all NBFIs to refrain from mobilising deposits by sending SMS with offers of high interest rates.

"This has created an awkward situation for clients," said the notice.

Bangladesh Bank sought an explanation in seven working days on why punitive measures should not be taken against the three.

Failure to provide a satisfactory answer will result in a penalty, said BB officials. Lanka Bangla rolled out a deposit product called "Quick Shonchoy" which now offers excessive interest, so much so that clients would be able to get threefold the amount deposited at the NBFI.

The scheme has a maturity period of 54 months.

Contacted, Khurshed Alam, head of retail business at LankaBangla Finance, said they had not violated the central bank rules as they had not mentioned interest rates in the SMS.

"We just mentioned when the product will reach maturity," he said.

First Finance now offers a 9.50 per cent interest rate against their fixed deposit scheme, according to a central bank report.

Prime Finance and Investment is providing Tk 1,022 in interest per month against deposits of Tk 1 lakh.

All of them are sending SMS to clients, describing features of different deposit products, including the three schemes.

The central bank officials said the interest rate on deposits has recently declined to a large extent as the country's banking sector was now flooded with excess liquidity.

But the NBFIs are still offering high interest rates, said the officials.

Despite repeated attempts, Md Ahsan Kabir Khan, managing director of Prime Finance and Investment, and Mohammed Mosharaf Hossain, managing director of First Finance, could not be reached over the phone.