Bangladesh Bank (BB) on Wednesday (December 21, 2022) relaxed term loan repayment policy for non-bank financial institutions (NBFIs) after relaxing such policy for banks’ borrowers. The borrowers would not be declared as defaulters if at least 50 percent of the installments are paid as of September, according to a notice of the central bank. The rest of the installments could be repaid on a monthly or quarterly basis within one year after the current repayment schedule of the loan. Read more: BB relaxes ICRRS to facilitate businesses’ loan The loan repayment relaxing policy would also be applied for the funding in investment of shariah-based financial institutions. If borrowers fail to repay the loans, lease and investments within the new repayment schedule, they would be classified as per rules, the BB notification said. The circular stated that the NBFIs are facing difficulties in realising installments on time as the cash flow to SMEs and large enterprises has been affected by the Russia-Ukraine war and global recession. Read more: BB extends tenure of relaxed ‘risk-weighted’ funding in new investment

The non-bank financial institutions (NBFIs) have demanded the withdrawal of the 7 percent interest-rate caps on deposits. They made the demand at the first meeting of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Standing Committee on Non-Banking Financial Institutions held in Dhaka Wednesday. According to the instruction of the Bangladesh Bank, NBFIs cannot offer more than 7 percent interest on deposits, lower than what the banks offer to their clients, the committee said. "The central bank's loan moratorium facilities apply only to banks, making these policies discriminatory to the country's NBFIs." Also, the committee urged the central bank to increase the size of the refinancing scheme for the NBFIs. FBCCI President Md Jashim Uddin said: "There should not be any policy of discrimination between the banks and NBFIs. The FBCCI will soon take the issue of interest-rate caps on deposits to the central bank."

Bangladesh Bank has fixed the interest rate at minimum 7 per cent on deposits and maximum 11 per cent in lending for non-bank financial institutions (NBFIs) like banks. The central bank issued a notification on Monday in this regard and sent to the top executives of all the NBFIs asking them to effect the instruction from July 1, 2022. The BB notification stated that some NBFIs are providing higher interest rates on deposits along with charging higher interest rates on lending, which is not investment friendly at all. Also read: BB to fix interest rates for NBFIs too “To bring an unified system for NBFIS in deposit collection and lending the central bank set a rational interest system to minimize the cost of fund as well investment,’ the BB notification said. The interest rate/profit will be effective on the deposit and lease or lending since the execution date of the instruction while the interest / profit on earlier collected deposit will be as per the condition. The new rate of interest/ profit will be effective after end of its tenure. Also read: Contactless payment service to be available for debit, prepaid card users: BB

FBCCI President Sheikh Fazle Fahim on Monday termed a landmark step the central bank’s decision to buy Treasury bills and bonds from banks and non-bank financial institutions (NBFIs) to handle any liquidity crisis.