Dhaka, Bangladesh (BBN)- The central bank has asked the financial institutions to give priority to investment in the small and medium enterprises (SMEs), renewable energy projects and effluent treatment plants.

The advice came at a review meeting with the chief executives and managing directors of the non-banking financial institutions (NBFIs) with Bangladesh Bank (BB) Atiur Rahman in the chair, held at the central bank in Dhaka on Tuesday.

“We’ll strengthen our drives through setting up special desk to expedite investment in the sectors,” Bangladesh Leasing & Finance Companies Association (BLFCA) Chairman Mafizuddin Sarker told reporters after the meeting.

He also said some NBFIs have already established special desks for women entrepreneurs and SMEs.

The central bank remains firm on its rules relating to Credit Information Bureau (CIB) report saying that the NBFIs will have to collect the CIB report before sanctioning loan.

“We’ll open a separate desk to provide CIB reports smoothly only to the NBFIs,” a BB senior official said.

The NBFIs has proposed to collect the CIB report from the central bank before disbursement of loan instead of sanctioning it.

At the meeting, the BB assured the NBFIs of examining the proposal on taking fixed deposits from individuals for six months instead of 12 months.

The NBFIs are now trying to get a chunk of government funds, which the commercial banks receive as deposit, aiming to meet the growing demand for liquidity.

“We’re not entitled to get such deposit,” Mr. Sarker said, adding that the NBFIs are now working on entitlement of such deposit.

“All NBFIs will be able to meet the BB’s instruction relating to raise their paid up capital by the end of December this year,” the BLFCA chairman said while replying to a query.

He also said some NBFIs have already raised their paid up capital to a minimum of Tk500 million.

The BB officials categorically said that the timeframe for raising the paid-up capital would not be extended for the NBFIs.

“We’ve also asked the NBFIs for taking preparation to implement the Basel-II framework from 2011 to maintain the global standard,” the BB official said, adding that the central bank is now preparing rules and regulations on the Basel-II for NBFIs.

Under the Basel-II, the minimum capital requirement and the risk weighted assets for the NBFIs will be fixed considering the overall performance of the sector, the BB official added.

The new Basel accord has been prepared on the basis of three pillars: minimum capital requirement, supervisory review process and market discipline.
Three types of risks — credit risk, market risk and operational risk — have to be considered under the minimum capital requirement.

Currently, 29 NBFIs are running their business across the country.

BBN/SS/SI/AD-17February10-12:31 am (BST)