Dhaka, Bangladesh (BBN) - The central bank of Bangladesh has asked the non-banking financial institutions (NBFIs) to double their paid-up capital to minimum BDT 1.0 billion by June 30, 2012 from the existing BDT 500 million, officials said on Sunday.
"The central bank has taken the latest move to consolidate the capital base of the country's NBFIs in line with the Basel-II framework that would be mandatory from January 1, 2012," a senior official of the Bangladesh Bank (BB) told BBN in Dhaka.
The NBFIs have been asked to meet the required capital through issuing rights or bonus shares or floating initial public offerings (IPOs). But no NBFI will be allowed to offer cash dividends so long there is capital deficit, according to a central bank circular, issued on Sunday.
“At least 18 NBFIs will have to issue rights or bonus shares to comply with the latest provision relating to capital base, the BB official said, adding that paid up capital of two NBFIs have already exceeded BDT 1.0 billion..
Currently, 30 NBFIs are running their business in Bangladesh.
The central bank of Bangladesh has taken the latest move to strengthen the capital base of the NBFIs in line with the Basel-II framework that has already been implemented on trial basis, the central bank officials said.
"The NBFIs will have to implement the Basel-II framework form January 1, 2012," another BB official said, adding that the minimum capital requirement and the risk weighted assets for the NBFIs will be fixed through considering the overall performance of the sector.
The Basel-II accord has been prepared on the basis of three factors: minimum capital requirement, supervisory review process, and market discipline.
Three types of risks - credit risk, market risk, and operational risk - have to be considered for the minimum capital requirement.
BBN/SSR/SI-24July11-8:29 pm (BST)
