Non-banks can’t show FDRs to meet regulatory requirement

The Bangladesh Bank today said non-bank financial institutions would not be able to show their fixed deposit receipts (FDRs) as statutory liquidity ratio if they took loans against the funds.

The instruction comes into effect immediately, according to a Bangladesh Bank notice.

NBFIs usually keep a large volume of their excess fund in banks in the form of FDRs, but many of them take loans by mortgaging the fund from the respective lender, a BB official said.

Every NBFI and banks have to maintain the statutory liquidity ratio (SLR) and cash reserve ratio (CRR) with the central bank against their total depositors' funds.

Lenders chiefly purchase government securities, such as Treasury bills and bonds, to maintain their SLR.

Along with the government securities, NBFIs are also allowed to show their FDRs kept at different banks as SLR.

But, the FDRs of the NBFIs, which are kept as collateral to take loans, are not considered to calculate as SLR, the BB official said.  

Every NBFI now maintains 5 per cent SLR of their deposits under Bangladesh Bank guidelines.