BB ensures NBFI boards stay aware of anomalies

Any irregularity unearthed in non-bank financial institutions (NBFIs) by Bangladesh Bank will from now require the institution concerned to convene a special board meeting within two months of the investigation to present the findings.

Moreover, presence has been made mandatory for the general manager or deputy general manager of the central bank's Financial Institutions Inspection Department, the team which carried out the inspection and a representative from the Department of Financial Institutions and Markets.

Besides, the minutes of the meeting have to be sent to Bangladesh Bank within 15 working days, said a central bank circular yesterday.

Furthermore, Bangladesh Bank has to be informed of steps the institution was taking in response to the irregularity.

The BB directive comes at a time when alleged loan scams and siphoning off of funds have crippled a number of NBFIs, eroding public confidence on the sector.

The woes widened after Proshanta Kumar Halder, also known as PK Halder, and his accomplices embezzled a huge sum of money from at least four NBFIs.

Non-performing loans (NPLs) in the NBFI sector rose 16 per cent year-on-year to Tk 10,328 crore in June, data from the central bank showed. The bad loans accounted for 15.38 per cent of the outstanding loans.

A number of NBFIs have recently failed to repay depositors despite their funds reaching maturity.

A BB official said the latest directive was in line with another issued for banks in 2009, which aimed at ensuring that the board of directors become aware of findings of BB inspection.

Similarly, the NBFIs will have to present BB inspection findings to the boards holding the special meeting, said the official.