Nbfi Composition

1 . Non Bank Financial Institutions in Bangladesh:

Initially, NBFIs were incorporated in Bangladesh underneath the Companies Work, 1913 and were governed by the dotacion relating to Non-Banking Institutions while contained in Chapter V with the Bangladesh Lender Order, 72. But this kind of regulatory platform was not sufficient and NBFIs had the scope of carrying out their particular business in the line of bank. Later, Bangladesh Bank promulgated an buy titled ‘Non Banking Finance institutions Order, 1989' to promote better regulation as well as remove the double entendre relating to the permissible parts of operation of NBFIs. But the order would not cover the whole range of NBFI activities. It also did not refer to anything about the statutory fluidity requirement to get maintained together with the central traditional bank. To remove the regulatory deficit and also to specify a wide range of activities to be covered by NBFIs, a fresh act entitled ‘Financial Establishment Act, 1993' was passed in 1993 (Barai ain al. 1999). Industrial Promo and Expansion Company (IPDC) was the initially private sector NBFI in Bangladesh, which in turn started it is operation in 1981. Since then the number continues to be increasing and December 2006 it come to 29. Of the, one is federal government owned, 12-15 are neighborhood (private) and the other 13 are founded under partnership with overseas participation.

1 ) 1 New Development & Activities of NBFIs

The main business of all NBFIs in Bangladesh is leasing, even though some are likewise diversifying in to other lines of organization like term lending, enclosure finance, product owner banking, value financing, venture capital financing and so forth Lease financing, term loaning and enclosure finance constituted 94 percent of the total financing activities of all NBFIs up to Summer 2006. A break-up with their financing actions reveals which the share of leasing and housing financial in the total investment stock portfolio of NBFIs has steadily decreased from 59 and 15 percent, respectively, in 2002 to 46 and 14 percent in June 2006. The share of term loans, on the other hand, has grown from 20% to thirty four percent through the same period implying increased focus on the former. The evolvement of NBFI business activity is noticed in Figure- 1 . 1 . It is also seen from the figure which the portfolio blend NBFIs is now quite steady from 2005.

NBFIs present services to varied sectors such as textile, chemical substances, services, drugs, transport, foodstuff and beverage, leather items, construction and engineering etc . The percentage with the sector sensible distribution of NBFIs expenditure in june 2006 is given in Figure- 1 ) 2 . Although an individual NBFI may have got a different collection as per their business strategy, the aggregated data demonstrates that NBFIs mainly focus on property & housing (13%), power & strength (12%), textile (11%) and transport sector (9%). Services (finance and business) is yet another area of importance for NBFIs. From the point of view off broad economic industries, investment inside the industrial sector (42%) focused that in the service sector (33%) in 2005. NBFIs are also discovering other groups namely ‘pharmaceuticals & chemicals', ‘iron, steel & engineering', ‘garments & accessories', ‘food & beverage' and ‘agro industries & equipment'. The weight of the sectors can be 23 percent of the total portfolio.

Sector wise circulation of spectacular investment of NBFI

The contribution of NBFIs' loans activities (lease, loan, casing, investment etc . ) to the overall economy persistently elevated over the years as can be seen in Figure -1. 3. In 2001, the share of NBFIs' financing to total GROSS DOMESTIC PRODUCT had been just 0. 84 percent, that has been more than doubled within 5 years to become 1 . 83

percent in 2005. The comparative figures for the bank sector were 34. fifty-five and 41. 32 percent in 2001 and 2005, respectively. The standard yearly growth of NBFIs' contribution to GDP was about twenty two percent during this period as compared to 5. 7 percent of that by banking sector. Even inside the regional...



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