NBFIs show lending strength

Private sector credit from non-bank financial institutions (NBFIs) surged nearly 40 percent to Tk 10,860 crore at the end of December 2008, with an increased share for term financing.
The amount of such loans was Tk 7,830 crore in December 2007.
The trend also continues to show a positive mood during the first half of 2009. During this period of the year such credit disbursement stood at Tk 5,080 crore, according to the provisional data of Bangladesh Leasing and Finance Companies Association.
The industrial lending by NBFIs also increased by 10.4 percent to Tk 6,140 crore in 2008, compared to Tk 5,560 crore in 2007.
“NBFIs are convenient, easily accessible and less time- consuming source of financing that has led to such an impressive growth of the sector,” said Mafizuddin Sarker, president of the sectoral trade body.
Sarker, also the chief executive officer of Lanka Bangla Finance, laid bare the association's plan to explore the untapped areas of business.
These financial institutions take up a rapidly growing segment of the country's financial system. They contribute to both the quality and quantity of financial services to cater to the investment needs.
Currently, 29 NBFIs are in operation -- one is government-owned, 15 are private local companies and the remaining 13 joint ventures with foreign partnership.
Although term financing by NBFIs has increased to nearly 40 percent at the end of June 2009 from 27.3 percent in December 2008, the contribution of leased assets and working capital are declining.
Leased assets had constituted 36.5 percent of the total assets of the NBFIs in June 2008, while it came down to nearly 30 percent in June 2009.
“Financing for working capital by NBFIs is declining because commercial banks increasingly grip this area,” Sarker told The Daily Star.
Total assets of NBFIs also showed a 20 percent growth. The amount of such assets reached Tk 12,753 crore in December 2008.
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