Non-banks urge BB to relax rules of interest rate cap

Non-bank financial institutions have requested the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) to convince Bangladesh Bank for relaxing some rules related to interest rate cap and loan repayment given their weak financial health.

The Bangladesh Leasing and Finance Companies Association (BLFCA), a platform of managing directors of non-banks in Bangladesh, wrote a letter to the FBCCI, the apex trade body of the country, on September 29 requesting it to raise the issues to Bangladesh Bank.

NBFIs are now struggling to manage deposits from both individuals and depositors because of an interest rate cap of 7 per cent set by the central bank, according to the letter.

"Currently, most of the banks are offering interest on deposits at 7 per cent or more, which has made deposit mobilisation by NBFIs almost impossible," it said.

On top of that, the central bank also extended the relaxation of loan payment for bank borrowers affected by the coronavirus pandemic and flood. However, such a facility has not offered for the NBFIs' borrowers.

The BLFCA says the central bank should form a special refinance scheme of Tk 10,000 crore for weak NBFIs.

A wide range of scams have occurred at a number of NBFIs in recent years, creating a difficult situation for them to repay depositors.

Besides, the central bank should form a committee with representation from the central bank, BLFCA, Association of Bankers, Bangladesh, a platform of managing directors of banks in Bangladesh and different experts to formulate a working plan for the reconstruction of distressed NBFIs.

Contacted, Md Jashim Uddin, president of the FBCCI, said the association of directors of NBFIs is also member of the apex trade body.

"So, the NBFIs have recently requested us to take required measures to this end. We have already sent a letter to the central bank to this end such that non-banks will get a relief from the ongoing situation.

Mominul Islam, president of the BLFCA, could not be reached over phone for a comment on the issue.

A Bangladesh Bank official says the central bank is the regulator of the NBFIs, so they should have discussed the issue with them directly.

"It is not expected to create pressure on the Bangladesh Bank by taking support from others to change the rules and regulations drawn up by the central bank," he added.