The growth of relatively large-sized loans, in volume terms of disbursement, by the country's non-banking financial institutions (NBFIs) declined in January-March period of the outgoing fiscal.
The relevant sources attributed this decline to the higher cost of funds, political unrest as well as power and gas supply-related shortages.
Talking to the FE early this week, Bangladesh Leasing and Finance Companies Association chairman Asad Khan said, "We could not open letters of credit (LCs) for importing any capital machinery from January until to date."
The level of loan disbursement under syndication arrangement with other co-financiers was zero during the period, and we could not give any big amount of loans to any new clients, he added.
"Besides, the rate of interest (cost of funds) on the volume of funds that we are getting still remains at a quite high level. As a result, the investment of NBFIs has witnessed a decline in the recent months," he said.
The county's existing problems include, among others, the impediments to NBFIs' investment expansion, managing director of Prime Finance Asad Khan observed.
The number of entrepreneurs in the category of large-loaness has increased in the first quarter (Q1) of the current calendar year (CY), more than the rate of growth witnessed in the previous quarter. But the volume of loans sharply declined in the Q1, compared with the corresponding figure of the last quarter in CY 2012, they said.
The number of NBFIs' loan recipients stood at 96 in January-March quarter of 2013. It was 74 in October-December period of 2012.
The large-loan growth decreased by about 7.0 per cent in the first quarter (Q1) of the present calendar year compared with the previous quarter of the last CY, according to a new report prepared by the sources concerned.
The growth of such loans by the NBFIs declined to Tk 43.53 billion, in aggregate value terms, in March last from Tk 46.76 billion in December last, the report said.
The NBFIs' investment increases in the country, on the basis of their relations with the clients, but at present the NBFIs are oddly placed in an otherwise uncomfortable business climate for their actual and potential clients and these do not encourage the new investments and the investors to take new loans for embarking on any ventures to avoid financial risks", a Bangladesh Bank (BB) high official told the FE.
Besides, the NBFIs' participation in the call money market has decreased over the last couple of months due to a declining trend about demand for credits by the clients. For this, the rate of call money has been hovering at a level -- between 7.0 per cent and 10 per cent -- since February last, he said.
Analysts said the downtrend about the growth of NBFI's loans would continue through the next few months on account of a possible restive political situation. The investment situation would come to a good shape if the general election was held peacefully and in accordance with the terms of a broad consensus among the major political parties, to hold face, fair and credible elections, they observed
The total investment growth on the part of the country's existing NBFIs recorded a sharp decline to the tune of 40 per cent or Tk 6.50 billion in January-March quarter (Q1) of 2013, compared to that of the October-December quarter (Q4) of 2012, the BB data showed.
Any NBFI can extend different loans, credits and lease finance of different amounts to their customers. An NBFI can disburse a loan, up to 15 per cent of a business entity's equity, to a client. Such loan operations are considered to be large loans, the sources added.
source: The Financial Express
