Overall performance of NBFI in Bangladesh

7/25/2019 Overall performance of NBFI in Bangladesh

1/24

Report On

Growth of Non-Bank Financial Institutions in BangladeshDiscussion Area

Management of Financial Institutions

P R E P A R E D F O R :Mr. Jahangir Alam ChowdhuryProessor and M.!.A Director

Department o Finance"ni#ersity o Dha$a

P R E P A R E D ! % :Fa$rul &slam

'M.!.A ( )*th!atch+Roll ,o: )-)-/

Department O FinanceFaculty o !usiness 0tudies

",&1ER0&2% OF D3A4A

D A 2 E O F 0 " ! M & 0 0 & O , :) / 2 3 F E ! R " A R % 5 6 7 ) -

1 | P a g e


2/24

& am

FA4R"8 &08AM )-)-/

2 | P a g e


3/24

Letter of transmittal

16thFebruary !"1#

Mr$ %ahangir &lam 'howdhury

(rofessor and M$B$& )irector

)e*artment of Finance+ni,ersity of )haka

ir

It is my immense *leasure to submit my class re*ort as you asked us to *re*are andsubmit as a re.uirement of course /Management of Financial Institutions 0F-"123on /Growth of Non-Bank Financial Institutions in Bangladesh4$

I ha,e tried my best to com*ile the *ertinent information as com*rehensi,ely as*ossible and if you need any further information I will be obliged to assist you$

5hanking you

Fakrul Islamoll No$ 1#-1#6MB& 1thbatch)e*artment of Finance+ni,ersity of )haka$

2a9le o Contents

3 | P a g e


4/24

,o. Contents Page ,o

7) Eecuti#e 0ummary 7*

76 &ntroduction o !angladesh;s Economy 7/

7< O#er#iew o Financial Mar$et in !angladesh 7=7- >eneral Concept o ,!F&s in !angladesh 7=

7* 8ist o ,!F&s in !angladesh )7

7/ 0tatistics Regarding ,!F&s in !angladesh )*

7? Conclusion 6)

78ecuti,e summary

4 | P a g e


5/24

Financial institutions ha,e traditionally been the ma9or source of long-term funds forthe economy in line with the de,elo*ment ob9ecti,e of the state$ & wide ,ariety of:nancial institutions 0FIs2 emerged o,er the years$ ;hile most of them e8tend direct:nance some also e8tend indirect :nance and still some others e8tend largelyre:nance$ FIs can be broadly categoriere Idiscussed how the NBFI will sustain by com*eting with ,arious factors$ 5hen the*a*er illustrates the asset liability com*osition of NBFI$ &fter that I discussed(ro:tability ratios for NBFI in Bangladesh$ 5hen I discussed the &sset .uality of NBFI

and decision of stress testing where we see most of the NBFIs? are in satisfactoryle,el e8ce*t eight NBFI$

5 | P a g e


6/24

&,2ROD"C2&O,

Bangladesh economy continues to *ro,e signi:cant resilience from its birth$ @n thebasis of emergent macroeconomic indications G)( growth rate is e8*ected to beA$! *ercent in the calendar year !"1-1#$ In the latest budget of our country G)( is

estimated to be 6$"C 0&ssumed by &)B $AC and IMF $DC but though it wase8*ected as more than AC in the calendar year !"1!-!"1$ 5he failure to catch thetarget is a=ected less by the slowdown in international trade than other emergenteconomies 0es*ecially &sian countries2 and has sustained solid :nancial E economicfundamentals$ ather the situation is mainly characteriDP @ >RO23RA2E

5he Gross )omestic (roduct 0G)(2 in Bangladesh increased by 6$"" *ercent in thecalendar year !"1!-1 o,er the *re,ious calendar year$ 5he G)( Growth ate in our

country is continuously achie,ing :,e *ercentile *oints to si8 *ercentile *oints$>istorically until !"1! Bangladesh G)( Growth ate is an a,erage of $6 (ercentwhich was all-time high at 6$AC in %une of !"11 and an all-time low of #$1C in %uneof 1#$ Bangladesh is well-thought-out to be as an emergent economy$ et nearlyone-third of *eo*le here 0&bout 1" million2 li,e in e8treme *o,erty$ In the lastdecade our country de,elo*ed due to growth of remittance microcredit andgarment industry$ till the main *roblems to 9usti:able im*ro,ement in Bangladeshare o,er*o*ulation *oor infrastructure corru*tion *olitical instability and a slowim*lementation of economic reforms$

Amount in Crore takaSource: Statistics Department, Bangladesh Bank and EPB

!""D-"

!""-1"

!"1"-11

!"11-1!

!"1!-1

- 1""""" !""""" """"" #""""" """"" 6"""""

#"1A

6"D#

D""

#""

#A!"

A11"

##!"

#!""6

##DD

#AAD!

G)( at 'onstant Market (rice Gross National Income

6 | P a g e


7/24

!""D-"

!""-1"

!"1"-11

!"11-1!

!"1!-1

$"""C $!""C $#""C$6""C$D""C6$"""C6$!""C6$#""C6$6""C 6$D""C A$"""C

$A#1C

6$"6C

6$A"DC

6$!#C

6$""C

$6!C

6$!AC

6$1"C

6$D#!C

6$C

G)( at 'onstant Market (rice Gross National Income

Source: Statistics Department, Bangladesh Bank and EPB

InHation ate

5he inHation rate in Bangladesh was documented at $!! *ercent in the calendaryear !"1!-1$ 5his inHation ate in Bangladesh is *eriodically con,eyed by theBangladesh Bureau of tatistics$ >istorically a,erage inHation rate in Bangladesh isabout 6$A (ercent$ 5his inHation rate reached at the highest e,er *oint at 1!$A1(ercent in )ecember of 1D and it got at a record lowest *oint of -"$"! (ercent in)ecember 16$


"

!

#6

D

1"

1!

A$"6

!$A1$#

!$A#$D

$D6$#D

A$16 A$!

$#

6$66A$1

D$D

1"$6!$!!

Bangladesh InHation ate

Money su**ly

In recent years an increasing tendency in broad money is obser,ed e8ce*t F!""6-"A$ 5hough the o,erall de,elo*ment of broad money *osition is inconsistent but thetotal amount am*li:ed in the successi,e years under study *eriod$ )uring F !"1!-1 total broad money in our economy has increased to 61"1$" crore 5aka from1A1"$" crore taka of F !"11-1!$

7 | P a g e


8/24

"$""

1"""""$""

!"""""$""

B"""""$""

#"""""$""

"""""$""

6"""""$""

A"""""$""61FF"1$"B

MB M! M1 InHation ate


tock Market E General Inde8

From F !""D-" to F !""-1" our stock market e8*erienced an immense growthwhich actually started from F !""-"6$ Between these years our general inde8

9um*ed from 1 to 61 in !"1-1"$ Later market fell drastically for ,ariousreasons$ &s of &*ril !"1 our general inde8 has come down to A"A$

"$""

1"""$""

!"""$""

"""$""

#"""$""

"""$""

6"""$""

A"""$""

General Inde8


8 | P a g e


9/24

Financialmar$et o

!angladesh

Money Mar$et

Capital mar$etForeign E:change

Mar$et

@,er,iew of Financial market of Bangladesh

Source: Statistics Department, Bangladesh Bank and EPB5he formal :nancial market in our country is consisted of three indi,idual

de*artments$ 5he money market com*rised of banks FIs and *rimary dealers as

intermediaries and sa,ings E lending instruments treasury bills as instruments$ 5he

ca*ital market is institutionali


10/24

NBFIs had the o**ortunity to carry out the businesses in the same line as of

banking$ 5hen Bangladesh Bank circulated an order titled /Non-Banking Financial

Institutions @rder 1D3 to con:rm enhanced regulation bylaw and at the same

time the Bangladesh Bank also initiated this law to eradicate the ambiguity

regarding the acce*table areas of business for NBFIs$ But unfortunately this was not

enough to satisfy the NBFI institutions as it did not co,er the com*rehensi,e ,arietyof NBFI acti,ities$ 5he order 0/Non-Banking Financial Institutions @rder 1D32 also

did not refer anything clearly about the statutory li.uidity obligation that?s to be

maintained with the central bank$

Later in order to eliminate the *re,ious regulatory insuJciency a new act titled

KFinancial Institution &ct 1? was *assed in 1$ 5he act also clearly de:nes a

broad range of acti,ities to be co,ered by NBFIs$ Industrial (romotion and

)e,elo*ment 'om*any 0I()'2 was the :rst NBFI in Bangladesh which commenced

its *rocess in 1D1$ ince then the .uantity of NBFI has been growing and as of %uly

!"1 it touched at 1$

'urrently in our country the o*erations of NBFIs are controlled and regulated by the

Bangladesh Bank$ 5he authority to in,ol,e in borrowing from the general *ublic

usually de*ends on some factors as minimum ca*ital re.uirement e8cellence of

management obedience with the concerned and related laws rules and regulations

and steadiness of res*ecti,e :nancial standing$ NBFIs may award loans to their

clients and the general *ublic u* to a certain amount or *ro*ortion and may also

*artici*ate in trust functions with s*eci:c earlier consent of the central bank$ 5he

NBFIs are not *ermitted to *artici*ate in foreign e8change transactions under the

*re stated laws and orders$

List of Non-Bank Financial Institutions in Bangladesh

&s of %anuary !"1#


11/24

!$ !angladesh &ndustrial Finance Company 8imited '!&FC+:

Bangladesh Industrial Finance 'om*any Limited 0BIF'2 is a 9oint ,enture Leasingand Financing 'om*any *romoted by a grou* of? Foreign and Local *onsors$

$ !ay 8easing and &n#estment 8imited:

Bay Leasing and In,estment Limited 0BLIL2 a second generation NBFI 0Non-BankingFinancial Institution2 was incor*orated in A February 16 s*onsored by a grou* of*rominent industrialists businessmen and *rofessionals$

#$ Delta !rac 3ousing Finance Corporation 8td. 'D!3+:

)elta Brac >ousing Finance 'or*oration Ltd$ 0)B>2 is the *ioneer largest ands*ecialist in >ousing Finance institution in the *ri,ate sector of the country$ &fter

commencing o*eration in the early 1A the com*any has registeredcommendable growth in creating home ownershi* among more than !"""families in )haka and other ma9or cities of the country$

$ Fareast Finance and &n#estment 8imited:

Fareast Finance E In,estment Limited-a leasing and :nancing com*any started itsbusiness in the early !""! to ser,e its clients with high ethical standards andaccountability$ Fareast belie,es that each of its acti,ities must *ro,ide satisfactionto its customers and will start *rogress for them$

6$ FA0 Finance and &n#estment 8imited

F& Finance and In,estment Limited ha,ing its registered and o*erational oJce islocated at +ttara Bank aban 0th Floor2 " Moti9heel B& )haka-1"""Bangladesh$ 5his was incor*orated in Bangladesh as a *ri,ate limited com*any one*tember !A !""1 and the com*any was subse.uently con,erted into *ubliclimited com*any under the 'om*anies &ct 1#$ 5he com*any obtained licensefrom Bangladesh Bank under the Financial Institutions &ct 1$

A$ First 8ease Finance and &n#estment 8td.:

First Lease Finance and In,estment Limited 0FLFIL2 ha,ing its registered ando*erational oJce is located at %ahangir 5ower 0rd Floor2 1" awran Ba


12/24

G( Finance 'om*any 0Bangladesh2 Limited 0G(B2 ha,ing its registered ando*erational oJce is located at 1' (aribag Mymansingh oad amna )haka-1!"Bangladesh$ 5he com*any was incor*orated in Bangladesh as a *ri,ate limitedcom*any on &*ril 1A 16$ 5he com*any obtained license from Bangladesh Bankunder the Financial Institutions &ct 1$

$ 3aBB Finance:

>a99 Finance 'om*any Limited ha,ing its registered and o*erational oJce is locatedat Fa9lur ahman 'entre 0DthFloor2 A! )ilkusha 'ommercial &rea )haka-1"""Bangladesh$ 5he com*any was incor*orated in Bangladesh as a *ri,ate limitedcom*any on %uly "! !""A$ 5he com*any obtained license from Bangladesh Bankunder the Financial Institutions &ct 1$

1"$&D8C Finance 8imited:

I)L' Finance Limited is a multi*roduct :nancial institution established in 1D with

the collaboration of re*uted international de,elo*ment agencies like orean)e,elo*ment Leasing 'or*oration 0)L'2 outh orea$ 5he *rimary goal of I)L'was to hel* moderni


13/24

1#$&nternational 8easing and Financial 0er#ices 8imited:

International Leasing &nd Financial er,ices Limited 0International Leasing2 a multi*roduct 9oint ,enture :nancial institution has been established with the *ur*ose ofassisting the *roducti,e enter*rises in Bangladesh through the *ro,ision of lease:nancing and related :nancial ser,ices for de,elo*ment of the industrial energy

agricultural trans*ort construction telecommunication *ower medicalcommercial and *rofessional sectors$

1$&slamic Finance and &n#estment 8imited:

IFIL is a *ublic limited com*any within the meaning of clause of section !012 ofcom*anies? act 1# in Bangladesh fully owned by Bangladeshi nationals$

16$8an$a !angla Finance 8td.:

Lanka Bangla Finance Limited 0LBFL2 a 9oint ,enture :nancial institution established

with multinational collaboration is in o*eration since 1A ha,ing license fromBangladesh Bank under Financial Institutions &ct 1$ ;ith institutionalshareholding structure educated E moti,ated human resources friendly workingen,ironment E dynamic cor*orate culture has enabled LBFL to be a di,ersi:ed:nancial ser,ices *ro,iding institution of the country$ 5echnical su**ort *ro,ided byam*ath Bank Limited ri Lanka has been working as a catalyst to emerge LBFL asmost inno,ati,e :nancial solution *ro,ider strictly in com*liance with the rules Eregulations of Bangladesh Bank$

1A$M&DA0 Financing 8imited 'MF8+:

MI)& FIN&N'ING LIMI57) 0MFL2 is leading :nancial institution of the country

licensed by Bangladesh Bank under the :nancial institutions &ct 1$ MFL >ousingLoan cheme has been launched to ful:ll the dream of the limited income *eo*le bye8tending :nancial su**ort in the form of term loan for constructing a house andor*urchasing an a*artmentreadymade housecommercial s*ace$

1D$,ational Finance 8imited:

National Finance 'om*any Limited ha,ing its registered and o*erational oJce islocated at +ni.ue 5rade 'entre 0+5'2 Le,el-1" D (antha*ath )haka-1!1$ 5hecom*any was incor*orated in Bangladesh as a *ri,ate limited com*any on March" !""$ 5he com*any obtained license from Bangladesh Bank under the FinancialInstitutions &ct 1$

1$,ational 3ousing Finance and &n#estments 8imited:

National >ousing Finance &nd In,estments Limited 0N>FIL2 is a uni.ue Loans anda,ings institution o*erating in our country$ It is a (ublic Limited 'om*any underthe 'om*anies &ct 1# and licensed by Bangladesh Bank under the FinancialInstitutions &ct 1$ ;e were incor*orated in &ugust 1D 1D with authori


14/24

ca*ital 5k$ !""" million *aid u* ca*ital of 5k$ #"" million$ @ur :nance includes>ousing :nance Lease :nance )e*osit scheme 'ar Loan$

!"$People;s 8easing and Financial 0er#ices 8td:

(eo*le?s Leasing and Financial er,ices Limited 0(LF2 is a :nancial institutionestablished within the ambit of Financial Institutions &ct-1 and was incor*oratedas a (ublic Limited 'om*any under 'om*anies &ct-1# on &ugust 1! 16$'om*any obtained license from Bangladesh Bank on No,ember !# 1A to carryon lease :nance business$ &uthori


15/24

e=ecti,e :nancial ser,ices with distincti,e customer ser,ice$ 5he 'om*any hasdi,ersi:ed its business and the growth has been steady and satisfactory$

!$0audi!angladesh &ndustrial and Agricultural &n#estment Company8imited '0A!&,CO+:

audi Bangladesh Industrial and &gricultural In,estment 'om*any Limited*o*ularly known by its acronym &BIN'@ is a 9oint ,enture Industrial Finance andIn,estment 'om*any owned by the Go,ernments of audi &rabia and Bangladesh$It was incor*orated under the Bangladesh 'om*anies &ct 11 on !#th %une 1D#with it?s head.uarter in )haka$ 5he com*any commenced o*eration in 1D6$ In1 Bangladesh Bank granted license to o*erate it as a Non-Banking FinancialInstitutions$

!6$2he "AE!angladesh &n#estment Co. 8td:

+&7 Bangladesh In,estment 'om*any Limited a *ri,ate limited com*any

incor*orated in Bangladesh under the 'om*anies &ct 11 on 11 %une 1DA with adesire to consolidate the 9oint e=orts of the go,ernment of Bangladesh and +nited&rab 7mirates to *romote economic co-o*eration between them$ 5o this e=ect acontract was signed on D No,ember 1D6 between the go,ernments of Bangladeshand &bu )habi Fund for 07conomic2 )e,elo*ment$

!A$"nion Capital 8imited:

+NI@N '&(I5&L LIMI57) is one of the largest in,estment banks and fastest growing:nancial institutions in Bangladesh$ (re,iously it was known as (eregrineBangladesh which had its origins and businesses rooted in >ong ong$ @ut of thelocal oJce of the erstwhile (eregrine 'a*ital Limited of >ong ong +nion 'a*ital

Limited )haka emerged in early 1D as a Bangladesh-based com*any led by agrou* of the foremost entre*reneurs of the country$ +nion 'a*ital within a shorts*an of time has *ro,ed its worth as a most forward-working ,igorous organi


16/24

&grani M7 Financing com*any Limited is a com*letely go,ernment ownedcom*any$ 5his com*any gets their license 1 %anuary !"11 from Bangladesh Bank$

5his FI is not started their o*eration yet$ 5his FIs main business *ur*ose is to gi,eM7 loan$

1$!angladesh &nrastructure Finance Fund 8imited:

Bangladesh Infrastructure Finance Fund Limited 'om*any is Go,ernment ownedcom*any$ 5his com*any gets license from Bangladesh Bank 16 @ctober !"11$ 5hisFI is not started their o*eration yet$

tatistics regarding Financial Institutions in our country

&mong the 1 NBFIs twenty three com*anies are listed in the )haka tock

78change$ 5he listed com*anies are Bay Leasing E In,estment Limited Bangladesh

Finance and In,estment 'o$ Ltd Bangladesh Industrial Financial 'om*any Ltd

)elta Brac >ousing Finance 'or*oration Ltd Fareast Finance E In,estment Limited

F& Finance E In,estment Limited First Lease Finance and In,estment Ltd$ G(

Finance 'om*any 0Bangladesh2 Limited I'B I)L' Finance Ltd$ International

Leasing E Financial er,ices Limited Industrial (romotion E )e,elo*ment 'om*any

of Bangladesh Ltd Islamic Finance E In,estment Ltd LankaBangla Finance ltd

MI)& Financing Ltd National >ousing Finance and In,estment Ltd (hoeni8 Finance

and In,estments Ltd (eo*les Leasing and Fin$ er,ices Ltd (remier Leasing E

Finance Limited (rime Finance E In,estment Ltd +nited Leasing +nion 'a*ital

Limited +ttara Finance and In,estments Limited$ 5he sectorial data for the :nancial

institutions sector in the following section has been collected and analy


17/24

(7 atio

ector 'a*

ector 7arning

" " 1"" 1" !"" !" "" " #"" #"

1$!

#!1$#6

!1$D1

!#$!

1$

6$#

Bank Financial Institutions

Source: Stock Bangladesh LimitedAmount in BDT Billion (except ratios

In the com*arison section I?,e com*ared the obtained data of the :nancialinstitutions sector with the Banking sector of our country$ Banking industry is closely

related with the :nancial institutions industry and it may be com*arable to the

banking industry as these two are com*arati,ely same in terms of basic features$

5he (7 ratio for the :nancial institutions sector is !#$! against the (7 ratio of

1$! from the banking sector If we com*are the sector ca*ital of these two

industry we can see that the ca*ital of the banking industry is signi:cantly higher

than that of :nancial institutions$ Because there are more *layers in the banking

industry than there are in the :nancial institutions industry$ @n the other hand the

.uality and strength of the *layers in the banking industry is signi:cantly higher

than the NBFIs$ o altogether banks *lay the ma9or role in our :nancial market$ 5his

rationale is also reHected in the sector earning of these two industries$ >er it is

ob,ious that the earnings of the banking industry is signi:cantly higher than the

:nancial institutions industry$

(orter factor &nalysis

17 | P a g e


18/24

Porter * actors or nancial institutions in !angladesh

&sset com*osition of NBFIs of Bangladesh

18 | P a g e

Financial Institutions Industry status Matured

factors>ighlo

weasons

'om*etition with ri,als >igh'om*eting in a matured and ,ast market

but ha,e to deal within market niche$

5hreat of new entrants Low'ost of fund is relati,ely high than the

banks$

5hreat of substitute >igh

)i=erent institutions like banks are

*ro,iding almost indistinguishable ser,ices

E *roducts$

Bargaining *ower of

buyers>igh

witching cost is low$ 5here are numerous

alternati,e sources are a,ailable$ &nd

clients are not controllable$ ather they may

switch to any *roduct or ser,ice as they

chose so$

Bargaining *ower of

su**liers>igh

u**liers of funds are com*arati,ely

insigni:cant in numbers other than *ublic

in,estors$ &s regulation binds the com*any

to take


19/24

Lease :nance

5erm :nance

In,estment in go,ernment securities

@ther in,estments

" " 1"" 1" !"" !"

$D

1"$!

$1

1$6

6$1

1#$D

1$A

#$D

1!$6

!$#

1$6

'!"1" '!"11 '!"1!

Amount in BDT !illionSource: Statistics Department, Bangladesh Bank

It is clear from the abo,e chart that in case of NBFI the ma9or *ortion of assetscomes from the lease and loan *ortfolio$ @ther in,estments and in,estments ingo,ernment securities *lay a negligible *art in the asset mi8$ It is also clear that theterm :nance is *laying the ma9or role in its asset mi8$ &nd gradually the *ercentageof term :nance in the *ortfolio of NBFI is getting *referred$ ;ithin last threecalendar year term :nance has increased by almost D"C and it is mostly inHuencingthe total asset *ortfolio$

'!"1"

'!"11

'!"1!

" " 1"" 1" !"" !" "" "

!#$6

!A6$#

!6$6

5otal assets

Amount in BDT !illionSource: Statistics Department, Bangladesh Bank

Liability com*osition of NBFIs of Bangladesh

19 | P a g e


20/24

'!"1"

'!"11

'!"1!

" " 1"" 1" !"" !" ""

$D

116$#

1#$!

!"1

!1$1

!6A

#!$6

A$

$6

)e*osits 5otal liabilities

hareholders? e.uity 0'a*ital2

Amount in BDT !illion

Source: Statistics Department, Bangladesh Bank

From the liability com*osition of the NBFIs in our country it can be summari


21/24

From the liability com*osition of the NBFIs in our country it can be summari


22/24

recently some restrictions ha,e been im*osed on the s*read the a,erage s*read

for :nancial institutions ha,e dro**ed shar*ly$

&sset .uality for NBFIs of Bangladesh

'!"1"

'!"11

'!"1!

"$""C 1"$""C !"$""C "$""C #"$""C "$""C 6"$""C A"$""C D"$""C

!#$D"C

1D$""C

!!$1"C

16$"C

1!$!"C

1!$"C

6$A"C

6A$"C

6$"C

'lassi:ed Loans E Leases to 'a*ital

Loan Loss (ro,isions to 'a*ital

Loan Loss (ro,isions to 'lassi:ed Loans E Leases

Source: Statistics Department, Bangladesh BankFrom the abo,e gra*hs it can be im*lied that the asset .uality of the NBFI industry

of our country is not u* to mark$ >ere the classi:ed loan ratio is com*arati,ely

high$ 5his high N(L ratio is killing u* a ma9or *ortion of *ro:t as the com*anies ha,e

to kee* certain *re-guided amount of *ro,isions against these classi:ed loans$ 5heamount of *ro,ision ,aries with di=erent classi:ed loan ty*es$ But it may be

mentioned that though the o,erall N(L ratio is high it may be lower for some

*rominent com*anies$

'!"11

'!"1!

1A$""C 1A$"C 1D$""C 1D$"C 1$""C 1$"C !"$""C !"$"C !1$""C

1D$"C

1$#"C

!"$A"C

1$""C

'a*ital to isk-;eighted &ssets 'a*ital to 5otal &ssets

Source: Statistics Department, Bangladesh Bank

22 | P a g e


23/24

&s *er recent modi:cation in the rules and guidelines by Bangladesh Bank e,ery:nancial institution has to maintain 1"C ca*ital ade.uacy ratio o,er its total riskweighted assets$ @,er the last two calendar years as *er Bangladesh bank re*ortsa,erage ca*ital to risk weighted assets was more than the desired le,el$ 5he stresstest result from the Bangladesh Bank re*ort based on end )ecember !"1! datadiscloses that out of 1 NBFIs the !! listed NBFIs submitted their stress testing

re*ort formally$ &mong the 1 NBFI are to be found in green


24/24

5here are many *roblems in the de,elo*ment *rocess of NBFIs and conse.uentlystrengthening the :nancial system of Bangladesh$ It is now well established thatNBFIs can contribute much in strengthening the :nancial system as well as in the*rocess of economic de,elo*ment of the country$ ince ince*tion in 1D6 NBFIs aresome-what successful to draw attention of the *eo*le and establish its im*ortancein the :nancial sector as well as in the economy of Bangladesh$ 5he business

growth of the NBFI and their *erformance and rating is im*ro,ing e,ery year whichshows the *ositi,e sign for this industry$ It is ho*ed that in future NBFIs would beable to *lay more signi:cant role in the de,elo*ment of economy of Bangladesh$

Banks and Non-Bank Financial Institutions are both key elements of a sound andstable :nancial system$ Banks usually dominate the :nancial system in mostcountries because businesses households and the *ublic sector all rely on thebanking system for a wide range of :nancial *roducts to meet their :nancial needs$>owe,er by *ro,iding additional and alternati,e :nancial ser,ices NBFIs ha,ealready gained considerable *o*ularity both in de,elo*ed and de,elo*ing countries$In one hand these institutions hel* to facilitate long-term in,estment and :nancingwhich is often a challenge to the banking sector and on the otherQ the growth ofNBFIs widens the range of *roducts a,ailable for indi,iduals and institutions withresources to in,est$ 5hrough their o*eration NBFIs can mobili

Overall performance of NBFI in Bangladesh

Documents

Transcript of Overall performance of NBFI in Bangladesh