Development of Non Bank Financial Institutions to Strengthen the Financial System of Bangladesh

Monzur Hossain and Md Shahiduzzaman
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Monzur Hossain: National Graduate Institute for Policy Studies

Finance from University Library of Munich, Germany

Abstract: Non-bank financial institutions (NBFIs) represent one of the most important parts of a financial system. In Bangladesh, NBFIs are new in the financial system as compared to banking financial institutions (BFIs). Starting from the IPDC in 1981, a total of 25 NBFIs are now working in the country. As on June 30, 2001 the total amount of paid up capital and reserve of 24 NBFIs stood Tk.6901.8 million (BB, 2002). The NBFIs sector in Bangladesh consisting primarily of the development financial institutions, leasing enterprises, investment companies, merchant bankers etc. The financing modes of the NBFIs are long term in nature. Traditionally, our banking financial institutions are involved in term lending activities, which are mostly unfamiliar products for them. Inefficiency of BFIs in long-term loan management has already leaded an enormous volume of outstanding loan in our country. At this backdrop, in order to ensure flow of term loans and to meet the credit gap, NBFIs have immense importance in the economy. In addition, non-bank financial sector is important to increase the mobilization of term savings and for the sake of providing support services to the capital market. The focus of this paper is to highlight the necessity and importance of NBFIs to strengthen the financial system for rapid economic development of the country.

Keywords: Non-bank financial institutions; banking financial institutions; financial system of Bangladesh (search for similar items in EconPapers)
JEL-codes: G21 G22 G23 G24 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2004-09-06
New Economics Papers: this item is included in nep-cfn, nep-cwa and nep-mfd
Note: Type of Document - pdf; pages: 21. Suggested citation of this paper is:Hossain, Monzur and Shahiduzzaman, Md., 'Development of Non Bank Financial Institutions to Strengthen the Financial System of Bangladesh' . Quarterly Journal of Bangladesh Institute of Bank Management (BANK PARIKRAMA), Vol. 28, No. 1, March 2002
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Working Paper: Development of Non Bank Financial Institutions to Strengthen the Financial System of Bangladesh (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpfi:0409006

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