BB relaxes deposit cap for healthy NBFIs

The central bank has allowed financially sound non-bank financial institutions (NBFIs) to accept deposits above the Tk 50 lakh limit set by law for individual depositors.

In a circular issued on Wednesday, the Bangladesh Bank (BB) said finance companies that meet strict performance criteria can now accept deposits above the ceiling for both individual and joint accounts.

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The Finance Company Act 2023 caps deposits at Tk 50 lakh for an individual and Tk 1 crore for a joint account. However, the BB has introduced a performance-based relaxation for institutions that demonstrate strong financial health and governance.

According to the BB circular, a finance company must meet three conditions simultaneously to qualify.

The finance company must maintain a classified loan ratio of 10 percent or less and a capital adequacy ratio of at least 10 percent, based on the most recent quarterly figures.

Besides, the company must also not have used any provision deferral facility offered by the regulator.

The regulator also clarified the treatment of deposits that already exceed the legal limits.

According to the circular, deposits collected before the Finance Company Act 2023 came into force can remain until maturity. Once they mature, they may be renewed if the finance company obtains written consent from the account holder.

The central bank said the new instructions do not apply to finance companies already subject to legal or regulatory restrictions on deposit collection.

If a court or the BB has previously barred a finance company from accepting deposits, those restrictions will remain in force. The directives of the circular, issued under Section 24(2) of the Finance Company Act 2023, took effect immediately.