VISIT REPORT FINANCIAL INSTITUTION INSTITUTION OTHER OTHER THANBA THANBANK NK Non-Bank Financial Institutions (NBFIs)
play a significant role in meeting the diversefinancial needs of various sectors of an economy and thus contribute to the e c o n o m i c devel develop opme ment nt of of the the coun country try as well as to the deepening of the country’s financial system. Asthe Ast he d e velo ve lop p me ment nt pro pr o c es esss pro pr o c e eds ed s , N BFIs become prominent alongside the banking sector.Both can play significant roles in influencing and mo bi li i ng s a vi n gs f o r i nve nvestm stm en t. !hei !h eirr involvement involvement in the the process process generally generally makes them competitors as they try to cate caterr to to the the sameneed sameneeds. s. "oweve "ow ever, r, they the y are also complementary to each other as each can develop its o wn niche , an d thus may v enture in to an area where the other may not , w hi ch ult im ate ly stren str ength gthens ens the th e fi nancial mobility of both. In relatively advanced economies there arediffere
nt types of non#bank financial instit utions namely insurance companies, companies , financecompanies, financeco mpanies, i nvestment nvestme nt banks and those dealing with pension and mutu mu tual al fun ds, ds , thoug tho ughfi hfin nancial innovation is blurring the distinction between different institutions. Isla ic !inanc" an# In$"st "nt Lt#%
is playing an important role in private sect se ctor or leas le asin ing g and real real esta estate te busi busines ness. s. As As a full fledged financial institution it receives deposits and e$tendsInvest Inv estmen ments ts throug thr ough h bett b etter er counseling and effective services to the clien c lientt for the socio# so cio# econ econom omic ic development of the country. !he company continued to be a ma%or fina fi nanc ncie ierr toIndu to Industr strial ial sect sector or and and has has also also supported sectors like &eal 'state, !rading and other sectors.Ba nk s us ua ll y do mi na te th e f inancial system in most countries bee c a u s e b u s i n e s s e s , households and b the public sector all rely on the banking system for a wide range of
financial products to meet their financial needs. "owever, by providing additional an d alternativefinancial services, NBFIs have already gained considerable popularity both in developed andde andd e velo ve lopi pin ng countries. In one hand these institutions help to facilitate long#term investmentand financing, which is often a challenge to the banking sector and on the other( the growthof NBFIs widens the range of p roducts available for individuals and i n sti st i tuti tu tion onss with wi th resources rces to inv inveest. st. Int&o#uction
Non#Bank Financial Institutions )NBFIs* play a significant role in meeting the diver sefinancial needs of various sectors of an economy and thus contribute to t h e e c o n o m i c deve develo lopm pmen entt of of the the coun countr try y as well as to the deepening of the country’s financial system. system. Asthe Ast he d e velo ve lop p me ment nt pro pr o c es esss pro pr o c e eds ed s , N BFIs become prominent alongside
the banking sector.Both can play significant roles in influencing and mo bi li i ng s a vi n gs f o r i nve nvestm stm en t. !hei !h eirr involvement involvement in the the process process generally generally makes them competitors as they try to cate caterr to to the the sameneed sameneeds. s. "oweve "ow ever, r, they the y are also complementary to each other as each can develop its o wn niche , an d thus may v enture in to an area where the other may not , w h i c h u l t i m a t e l y strengthens the financial mobility of both.In relatively advanced economies there are different types of non#bank financial institutionsnamely insurance companies, finance companies, investment banks and those dealing wit wi t h pension pens ion and mutual funds, though fi nancial innovation is blurring the distincti on betweendifferent institutions. In some countries financial institutions have adopted both banking andnon#banking financial service packages to meet the changing re+uirements of the customers.In the Bangladesh conte$t,
NBFIs are those institutions that are licensed licensed and and controll controlled ed by theFi theFina nanc ncia iall In s ti tuti o n s Ac t of -- )FIA ’’ - *. NBFIs give loans and advances for indu in dust stry ry,commerc ,commerce, e, agricultu agriculture, re, housing housing and real estate, carry on underwriting or ac+uisition businessor the investment and re#investment in shares, stocks, bonds, debentures or debenture stock or securities issued by the government or any local authority( carry on the business of hire purchase transactions including leasi ng of machinery or e+uipment, and use th eir capital toinvest toinvest in companies.!he importance of NBFIs can be e mp ha si ed fr fr o m t h e s t r uc t ur e of of th th e financial system. Inthe financial system of Bangladesh, commercial banks have emerged in a dominant role inmo inmobili ing fu funds an and us using th these resources for investment. /ue to their structural limitationsand rigidity of different regulations, regulations, banks could not e$pand their operations in all
e$pectedareas and were confined to a relatively limited sphere of financial services. 0oreover, their efforts to meet long term financing with short term resources may result in asset#liabilitymismatch, asset#liabilitymismatch, which can create pressure on their financial base. !hey also could not broadentheir o per ati on a l ho ho r i o n ap ap p r e c i a b l y b y offering new and innovative financial produc ts. ! h e s e d r a w b a c k s l e d t o t h e emergence of NBFIs in Banglad esh for supportingindustriali ation and economic growth of the country. '%O
"cti$"s o! t*" stu#+,
1b%ectives are to highlight different features and product base of I s l a i c F i n a nc " a n# In$"st "nt Li it"#
, the effects of banks’ entry into the non#bank financing area, identifyingthe challenges faced by NBFIs in Bangladesh. %Rational" o! c*oosin. t*" to/ic,
Non#bank financial institutions usually le ase out capital machinery to various econo micsectors, allows home loans to individuals, etc. 1btaining loans from such NBFIs NBFIs is easy easy and+uic and+uicker ker than tha n banks ban ks.. !here is no hassle and less time consuming in obtaining such lo an s . 2ec uri ty and loa n docu men tat ion process are also easy. All of ab ove helped a lot lo t inin ini n dus tri ali ati on of Bangladesh as well as making the dream of individuals true having own ow n property property under home loans. loans. 2uch home loans in turn help growth of another economic sector.As such we have chosen this topic to highlight few issues 3 most strong positioning o f NBFIs in Bangladesh. Bangladesh. 0%1"t*o#s,
. 2 o u r c e o f d a t a !he analyses have been conducted on the basis of the secondary data obtained from differentsources like &eview of Banking and Financial Institution 1f Bangladesh, Bangladesh
Bank Annual &eport, Bangladesh 4easi ng and Finance 5ompanies Asso As socc i ati at i o n )B4 )B 4 F 5A* 5A * 6e 6ear ar Book And Bangladesh Bank )7889*, :Financial 2ector &eview;. Bangladesh Bank
"t"&s
!he basic >arameter of the Non Banking Financial Institution is annual growth g rowth rate, their types and sector of investments and target market against each type of investment or finance.Financing process. 0%Anal+tical t"c*ni2u"s 3 tools
/irect observe vision and work with related activities and Focus =roup /iscussion. Basic institution(s) 3 issu" 3 in#ust&+
