Banking division rejects BB’s draft on NFBIs
The banking division of the finance ministry has rejected the Bangladesh Bank (BB) recommendations on non-banking financial institutions (NBFIs) in the proposed act alleging that the central bank has not taken opinion from the stockholders.
“There is no sign of discussion with the stockholders of NBFIs in the proposed “Financial Institutions Act 2011,” said a senior official of the finance ministry.
He also said that the BB authority has not prepared the proposed financial institutions act with 35 provisions.
The banking division last week sent a letter to the governor of BB Atiur Rahman to revise the proposed Financial Institution Act 2011.
As per the letter, the banking division asked the BB authority to prepare the draft of the Financial Institutions Act 2011 with the consent of the stockholders of the non-banking financial institu-tions.
Earlier, the BB authority sent the proposal seeking opinion from the finance minister AMA Muhith.
According to the draft, the scope of business of NBFIs is going to be widened to enable those to contribute more to the economy and provide better services to clients. The range of the proposed “Financial Institutions Act 2011” is being expanded by including development finance, credit card, factoring and forfeiting under the law.
The proposed act imposes various restrictions regarding tenure and number of directors of the NBFIs like that in banks.
The government has taken an initiative to enact a new law replacing the 18-year-old Financial Institutions Act 1993.
According to the proposed act, in case of development financing, the NBFIs would be able to invest in new industries, agriculture and trade or any type of financial initiative. The NBFIs can get involved in factoring and forfeiting business also.
Factoring is a financial transaction whereby a business house sells its accounts receivable (such as invoices) to a third party (called a factor) at a discount in exchange for immediate money with which it continues business.
It is different from forfeiting only in the sense that forfeiting is a transaction-based operation involving exporters in which the firm sells one of its transactions, while factoring is a financial transaction that involves the sale of any portion of the firm's receivables.
As per the draft, no person, company or members of a same family can hold more than 10 percent of shares of any NBFIs either alone or collectively.
News: Daily Sun/ Bangladesh/ Aug-14-2011
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