New NBFI enters market today

A new non-bank financial institution (NBFI) enters the market today with a focus on venture capital.

With the new entrant -- CAPM Venture Capital and Finance Ltd -- the number of non-banks in Bangladesh will stand at 33.

Industry insiders said the high number of NBFIs will intensify competition in the country's saturated financial sector.

“We will bring new products, such as venture capital and equity funds, to attract customers,” Mustafizur Rahman, managing director of CAPM Venture Capital, told The Daily Star yesterday.

Venture capital, which is money provided by investors to start-ups and small businesses with perceived long-term growth potential, is not available in Bangladesh, despite a large number of NBFIs and banks operating in the country.

Venture capital is an important source of fund for start-ups that do not have access to the capital market. Rahman said about 30 percent of their products will be new -- venture capital, equity fund and green financing -- and 70 percent will be traditional.

Bangladesh Bank granted the licence to CAPM Venture Capital in July last year.

The company's paid-up capital is Tk 105 crore. Institutional investors -- both public and private -- own 56 percent shares, and the rest is owned by individuals.

Of the institutional investors, state-owned Sadharan Bima Corporation and Investment Corporation of Bangladesh own 9 percent shares each.

NBFIs are regulated under Financial Institution Act, 1993 and controlled by Bangladesh Bank. IPDC was the first non-bank that was established in 1981.

Of all the NBFIs, two are fully government owned, one is a subsidiary of a state bank, 15 are local private initiatives and the rest 15 are joint ventures.

The major source of funds of the NBFIs is term deposits for a minimum of six months, credit facility from banks and call money as well as bond and securitisation.

Rahman, who has nearly three decades of experience in different NBFIs, said the prevailing investment scenario has forced them to develop new and innovative products.

“In addition to venture capital and equity fund, we want to invest in climate change and green financing products,” he said.