An editorial published by The Daily Star on December 2, on the proposed opening of a new non-banking financial institution (NBFI), has been on point.
First of all, our banking sector is already under a lot of strain due to the bad loan situation. Secondly, the performance of the existing NBFIs is not very encouraging either. Except for a handful of NBFIs, the remaining are struggling to pay their creditors. In fact, Bangladesh Bank had to start the liquidation process of a prominent NBFI earlier this year due its poor performance.
One wonders why would the central bank consider issuing license to a new NBFI under such circumstances? The central bank should revisit its licensing policy and, unless absolutely necessary, it should not issue license to any new NBFI, no matter who the sponsors are. We do not need more NBFIs, we need the existing ones to perform properly, for the benefit of the people and the economy.
Niketan, by email