Awarding licence to another NBFI

The central bank's plan to award licence to a new non-bank financial institution (NBFI), despite the struggle of around 10 NBFI's to pay back their customers and the banks, is disturbing. What is even more worrisome is the fact that the board of the proposed NBFI—Strategic Finance and Investments—involves people from the board of a rebranded local bank that has been mired in gross financial irregularities.

Earlier this year, the central bank had to begin liquidation of an NBFI—People Leasing and Financial Services—for its failure to repay depositors' money despite maturity of the funds. And some of the other NBFIs are also struggling to keep their nose above the water due to rampant corruption and nepotism.

Amidst the low performance and existential crisis of so many NBFIs, it is perplexing why the central bank would want to issue license to a new one. And the 47.21 percent spike in NFBI default loans from six months earlier to Tk 8,038 crore, doesn't reinforce the central bank's rationale either.  

The case of Strategic Finance and Investments is symptomatic of a deeper malaise plaguing our financial sector—misgovernance and favouritism. It is unfortunate that the central bank, despite the many ills of the banking and non-banking financial sectors, is living in its own bubble of comfort—allowing delinquent borrowers and institutions to flourish, expand and thrive. At a time when the country is aiming for double-digit growth, the central bank's attitude of rewarding delinquency will very likely dent the government's economic plans.