Dhaka, Bangladesh (BBN) – The central bank of Bangladesh has issued a guideline on products and services of non-banking financial institutions (NBFIs) to protect clients’ interest through ensuring availability of information, proper understanding and regular feedback.
Under the new provisions, the NBFIs are allowed to invest maximum 50 percent of their total loan portfolios in any single product under any of broader categories.
However, the limit may be extended up to 80 per cent for the NBFIs, providing credit solely to one particular specialized area, such as small and medium enterprises (SMEs), housing and infrastructure development.
Besides, documentation fees have been fixed at 0.50 percent of the sanctioned amount or BDT 200,000 whichever is lower. However, the minimum amount of such fees may be determined by the NBFIs, which is not more than BDT 5,000.
“The documentation fees must not be charged more than once,” according to the guideline, issued on Wednesday.
“We’ve prepared the guideline for the first time in Bangladesh following consultation with the stakeholders,” a senior official of the Bangladesh Bank (BB) said.
It will help promote sound risk management practices in managing and controlling risks, associated with products and services at various stages. It will also help bring discipline in launching new products and services, he noted.
He also said the guideline will help strengthen the mechanism to enhance clientele protection by ensuring availability of information, proper understanding and regular feedback.
The NBFIs are now dealing with various types of products and services. For having a clear illustration and easy understanding, all the products and services are presented from asset-side and liability-side perspective, according to the guideline.
“Both the asset-side and liability-side products and services are categorised under some generic broader categories,” it noted.
“The NBFIs will have to take prior approval from the central bank for launching new products and services,” another BB official said.
They will also need assessment, including on customer suitability, for the new products and services.
The NBFIs must use clientele acknowledgement form and clientele feedback to ensure their transparency and accountability and to strengthen organisation-client relationship.
The guideline also said that the NBFIs will have to keep records of clientele feedback in regular interval, preferable semi-annually or annually.
The market operators welcomed the BB’s latest move, saying that the guideline on products and services will be able to facilitate the NBFIs’ overall business.
They, however, urged the BB to review the limit of documentation fees to protect their interest.
BBN/SSR/AD-18July13-10:34 am (BST)
