Bangladesh Bank has barred non-bank financial institutions from conducting any sort of direct transaction including deposit collection and issuing credit through their business development centers amid surfacing of huge corruptions and irregularities in the sector.
The central bank on March 21 issued a circular in this connection to all the chief executives and managing directors of the scheduled NBFIs. The circular will be a supplement to BB’s earlier circular issued in 2010 in this regard.
According to the circular, the business development centers of NBFIs cannot perform any financial transactions like deposit or credit or lease.
‘But, the centers can conduct many activities, including customer services, consultation, complaint receiving and settlement and human resources development, which are not directly related to financing business,’ the circular said.
NBFIs will have to take approval from Bangladesh Bank before establishing any kind of business center, including customer service center, call center, unit office, and sales office, the circular added.
To get BB approval, the entities must apply to the central bank in a BB-specified format.
The expediting function of the NBFIs’ business development centers, customer service centers, call centers, unit office and/or sales office is the main reason for the imposition of the new clause.
Under the previous instruction, BB specified satisfactory capital adequacy, profitability, asset quality, asset valuation of NBFIs among the major criteria for granting permission for such business development centers.
According to a central bank assessment, 12 among the 34 NBFIs are in ‘read zone’, meaning that they are at highest risk.
Of the rest, only four are in the green zone and 18 in the yellow zone.