Thirteen out of 29 non-bank financial institutions (NBFIs) have increased their minimum paid-up capital to Tk 1 billion each from Tk 500 million following a central bank directive.

Bangladesh Bank (BB), earlier in July last year, asked the NBFIs to double their minimum paid-up capital or the portion of the authorised stock to Tk 1 billion by June 2012.

The rest of the NBFIs have been working to raise their paid-up capital and meet the target by the 30 June deadline, insiders said.

Only three NBFIs had paid-up capital of Tk 1 billion each in September 2011 while the number was nine at the end of 2011, according to BB data.

The central bank in its directive further asked the NBFIs to issue rights and bonus shares to raise their paid-up capital within the stipulated timeframe.

Asad Khan, chairman of Bangladesh Leasing and Finance Companies Association (BLFCA), told daily sun that most of the firms have already raised their paid-up capital and the country’s non-banking sector would be able to stand on a strong financial footing soon.

Khan, managing director of Prime Finance and Investment Limited, also described the directive to double paid-up capital of NBFIs as a positive approach by the central bank.

The non-bank financial institutions have been increasing their paid-up capital in recent times and currently they have over Tk 24 billion for long-term investment, he said.

The amount can be and needs to be bigger, he added.

BLFCA sources said 16 out of 22 listed NBFIs are yet to fulfill certain conditions to maintain optimum business standards while seven others are considered to be compliant.

Companies who are yet to fulfill the conditions are – Bangladesh Industrial Finance Company Ltd (BIFC), Bangladesh Finance and Investment Company Ltd (BFIC), FAS Finance and Investment Ltd, First Lease Finance and Investment Ltd, GSP Finance Company (Bangladesh) Limited, Islamic Finance and Investment, Midas Financing Ltd, National Housing Finance and Investment Ltd, Phoenix Finance and Investment, Uttara Finance and Investment Ltd, Hajj Finance Company Ltd, Industrial and Infrastructure Development Finance Company (IIDFC), IDCOL Ltd, National Finance, Reliance Finance, Saudi-Bangladesh Industrial and Agricultural Investment Company (SABINCO) and UAE-Bangladesh Investment Company Ltd (UBICO).

Some executives of those firms said they have an option to appeal to the central bank to extend the deadline for raise the paid-up capital to Tk 1 billion.

Hajj Finance Company Ltd has already sought more time from the central bank, BLFCA officials said.

They also expressed the hope that the firms would be able to fulfill the paid-up capital requirement soon since the country’s economic situation is currently considered favourable for the NBFIs.

Prime Finance and Investment Ltd, which currently maintains a paid-up capital of Tk 2.27 billion, has emerged as the biggest capital holder among the private sector NBFIs.

State-run Investment Corporation of Bangladesh (ICB) has Tk 3.38 billion in paid-up capital.

Industrial Promotion and Development Company of Bangladesh Limited (IPDC), IDLC Finance Ltd, Delta Brac Housing Finance Corporation Ltd (DBH), Bay Leasing and Investment Ltd, Premier Leasing and Finance Ltd, Union Capital Ltd, United Leasing Company Ltd, Far-East Finance and Investment Ltd, Lanka Bangla Finance and International Leasing and Financial Services Ltd (ILFSL) have already increased their paid-up capital to Tk 1 billion each.

The Daily Sun/ Bangladesh/ 19th May 2012