NBFIs urged to refrain from spending on collecting deposits
Bangladesh Bank has today requested Non-Banking Financial Institutions (NBFIs) to refrain from making additional expenditure to collect deposits from individuals and organizations.
The central bank’s directive came after it was found that some NBFIs were spending money to mobilize deposits showing the expenses under different names such as commission, development and business development fees.
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“This is unethical and unacceptable,” according to a circular issued by the BB to NBFIs.
Such activities increase organizations’ cost of funds unreasonably, fueling interest rates for loans, the central bank said.
The Bangladesh Bank has ordered the NBFIs not to incur any implicit expense under any name except the stated rate of interest on deposits or rate of profit.
NBFIs will regularly publish their interest rate for deposits on their websites, the central bank said.
A senior BB official said deposits should go to NBFIs because of their goodwill. Deposits should not be collected by paying a commission, he added.
Bangladesh has 35 NBFIs and total NBFI deposits reached Tk 44,121 crore in the July-September period, 0.42% higher than the previous April-June quarter, according to BB data.
NBFI advances declined by 0.79% to Tk 70,608 crore in the July-September quarter of 2021 compared to the April-June period of the same year.
Like banks, NBFIs cannot collect savings deposits. They are authorized to take deposits for periods of three months and more.