The financial health of four more non-bank financial institutions (NBFIs) could be bad as their funds might have been dubiously diverted, said Finance Minister AHM Mostafa Kamal yesterday.
“We suspect that funds from three to four non-bank financial institutions were not used for business purposes. We will have special audits, after which required measures would be taken,” he told reporters after a meeting with managing directors and chairmen of 34 NBFIs.
Asked whether the financial health of the NBFIs in question was as bad as that of People Leasing and Financial Service Ltd (PLFS), he said, “We have already taken action against People Leasing and Financial Service Ltd. We will notify you after getting the real picture of the NBFIs we have doubts about.”
The central bank has recently decided to liquidate PLFS, the first time such an action was taken in Bangladesh’s financial sector.
Yesterday’s meeting was held at the National Economic Council auditorium where Bangladesh Bank Governor Fazle Kabir, Finance Secretary Abdur Rouf Talukder, and Banking Division Secretary Md Ashadul Islam were present.
At the meeting, chairmen of two NBFIs suggested that the finance minister liquidate NBFIs that have poor financial health due to malpractices while disbursing loans, said a Bangladesh Bank official who was present in the meeting.
The entire NBFI sector should not be burdened with the malpractices of three to four institutions, they said.
Some of the NBFI directors and chairmen said willful loan defaulters were making it difficult to run their financial institutions. In many cases, the defaulters file writ petitions with the High Court to thwart efforts to recover loans, sources present in the meeting said.
The finance minister said the government would amend acts related to the financial sector to plug loopholes so that willful defaulters are forced to pay back. Defaulters would have to deposit a certain portion of their outstanding before filing a lawsuit with the court, Kamal said.