Dhaka, Bangladesh (BBN)– Bangladesh’s non-banking financial institutions (NBFIs) will be allowed to borrow more from the inter-bank call money market.

The decision was taken at a meeting with the chief executive officers (CEOs) and managing directors (MDs) of NBFIs at the central bank headquarters in Dhaka on Tuesday with Bangladesh Bank (BB) Governor Fazle Kabir in the chair.

Under the decision, the NBFIs will be empowered to borrow from the call money market maximum 40 per cent instead of the existing level 30 per cent of their equities.

Talking to the BBN, a BB senior said the central bank has decided to relax its policy to help easing liquidity pressure on the NBFIs.

He also said the central bank will issue a directive in this connection shortly.

Earlier on January 29 last calendar year, the central bank set call money borrowing limit based on equity instead of net asset earlier for the NBFIs.

The equity will be fixed on the basis of balance-sheet on the last working day of each calendar year of the NBFI concerned.

The NBFIs have also been advised to raise capital through issuing bonds that will also help reducing dependence on bank’s funds.

The central bank has suggested the NBFIs to create an alternative source of fund through boosting bond market in Bangladesh, according to the central banker.

He also said the central bank, Bangladesh Securities and Exchange Commission (BSEC) and the Ministry of Finance are working to develop the country’s bond market.

When contracted with Md Khalilur Rahman, chairman of Bangladesh Leasing and Finance Companies Association (BLFCA), he said the BB’s latest move will help easing liquidity pressure on the NBFIs to some extent.

He also said the NBFIs are also interested to issue bonds for creating a new window for investment.

The central bank governor will send a letter to the National Revenue Board (NBR) shortly requesting to facilitate boosting bond market through providing policy supports, the meeting sources said.

At meeting, the CEOs were advised to improve their quality of assets and for taking necessary measures to reduce the amount of non-performing loans (NPLs) through expediting their recover drives.

Currently, 34 NBFIs are running their business in Bangladesh.