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Deposits in NBFIs dropped by Tk 380cr in Apr-June

Published : Wednesday, 28 October, 2020 at 12:00 AM  Count : 213

The amount of deposits in the country's non-bank financial institutions (NBFI) dropped by Tk 380 crore in April-June quarter this year in the wake of COVID-19 pandemic.
NBFIs officials said it mainly resulted from public distrust in NBFIs and also rush for fund withdrawal which not only shrunk their funds but also contributed to reduce the inflow of deposits.
As per Bangladesh Bank (BB) data, the amount of deposits in the NBFIs dropped to Tk 43,264.29 crore at the end of June this year from Tk 43,644.12 crore as of March this year after an improvement in the January-March quarter.
In 2019, the amount of deposits in NBFIs dropped to Tk 43,121 crore from Tk 45,549 crore at the end of  2018. It happened mainly from withdrawal of funds by banks which had earlier deposited money to beef up their capital base.
Such withdrawal caused liquidity shortage in the NBFIs prompting them to seek support of the regulatory body to cope with the situation. IIDFC managing director Golam Sarwar Bhuiyan told journalist, 'The situation has changed in the last few months as banks eased their pressure to withdraw funds from NBFIs.'
As the demand for credit remained subdued due poor business outlook when the country is also making preparations to tackle a possible second wave of coronavirus outbreak, the NBFIs' demand for fresh funds has also dropped, Golam Sarwar said.
'We are still in need for fund to lower the cost of fund, not to tackle liquidity crisis,' he said, adding that it would not be possible for the NBFIs to remain competitive given the falling lending rate in the banks.
To remain competitive, the NBFIs are trying to replace the costly funds with low-cost ones, Golam Sarwar said.
Earlier at a press briefing on July 14, Bangladesh Leasing and Finance Companies Association (BLFCA), a platform of the NBFIs, urged banks not to withdraw deposits from NBFIs as such moves amid  coronavirus outbreak were causing liquidity crisis in the sector.
At the meeting, BLFCA chairman Mominul Islam, who is also the managing director and CEO of IPDC Finance, urged the central bank to support the sector to tackle the risk.
Following the request, the central bank on July 21 reduced the cash reserve ratio for NBFIs by one percentage points allowing them to keep 1.5 per cent cash reserve ratio on bi-weekly basis and at least 1 per cent daily against term liabilities.
It allowed the NBFIs to utilise around Tk 350 crore which were  kept as Cash Reserve Ratio (CRR) with the BB, for income generation purposes and to get rid of the liquidity shortage.
But several NBFIs are still going through the liquidity crisis situation, said NBFI officials.








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