Top executives of non-bank financial institutions (NBFIs) have sought emergency liquidity support from the central bank to improve their financial health.
The support was sought in a meeting with the newly-elected committee of the Bangladesh Leasing and Finance Companies Association (BLFCA) at the Bangladesh Bank (BB) headquarters in Dhaka on Tuesday with BB Governor Fazle Kabir in the chair.
In the meeting, the central bank high-ups assured the BLFCA leaders of examining their proposal on the emergency liquidity support.
"We'll examine the legal aspects of such a liquidity support," a senior BB official told the FE, replying to a query.
He also said the central bank advised the BLFCA leaders to take initiatives to help each other in solving their liquidity problems.
The BLFCA, a forum of managing directors (MDs) and chief executive officers (CEOs) of the NBFIs, also proposed a special refinancing scheme involving Tk 100 billion on the same grounds.
The proposed scheme envisages five-year term-loans to be extended to them and the loans will be repayable on a semi-annual instalment basis.
The interest rate of the loan should be equivalent to the six-month Treasury bill rate.
On the other hand, the central bank also advised the BLFCA leaders to submit a reconstruction scheme shortly, focusing on how to restore confidence of depositors through ensuring good governance in the sector.
"We'll try to submit within a week a draft reconstruction programme to the central bank on how to revive the weak NBFIs after discussions with our chairmen," Mominul Islam, chairman of the BLFCA, told the FE after the meeting.
Mr. Islam, also MD and CEO of IPDC Finance Limited, said the BLFCA sought an emergency liquidity support from the BB against their cash reserve requirement (CRR) and statutory liquidity ratio (SLR) with the central bank.
Under the existing provisions, deposit-recipient NBFIs maintain SLR at the rate of 5.0 per cent and non-deposit receiving NBFIs at 2.5 per cent while both types of NBFIs keep CRR with the central bank at 2.5 per cent.
"We've also urged the governor to allow incorporation of some rules and regulations of neighbouring countries particularly India and Sri Lanka in the draft financial companies act," the BLFCA chief added.
Some banks are still feeling shy to deal with the NBFIs to avoid possible risks, according to insiders in the banking sector.
Some NBFIs are facing extra pressure on liquidity because of the shyness of the banks about transactions with them, they explained.
In the meeting the NBFIs were advised to move forward to help develop the country's bond market that might become a source of funds for them, the meeting sources said.
"We're now working to restore confidence of depositors with help from all stakeholders," Md. Golam Sarwar Bhuiyan, first vice chairman of BLFCA, told the FE while explaining their latest initiatives.
Earlier on Monday, the BLFCA leaders met with Finance Minister AHM Mustafa Kamal in a bid to improve the financial health of the NBFIs.
Talking to the FE, Abu Zafore Md. Saleh, second vice chairman of the BLFCA, said the NBFIs were working on different initiatives to ensure the interest of depositors.
Currently, 34 NBFIs are running their business across the country.
