BB approval must for NBFIs to lend to subsidiaries, waive interests

The non-bank financial institutions (NBFIs) will have to take permission from the central bank to lend to their subsidiaries or associates and waive loans or interests.

The move is aimed at protecting the interests of the depositors and restoring discipline in the financial sector, said the Bangladesh Bank in a notice today.

The central bank came up with the directive after it found that NBFIs are investing in their subsidiaries or associated companies breaching the regulatory limit.

Besides, rules are being violated in the case of the waiver of interests or loan write-off.

"As a result, the discipline in the financial sector is being hampered and there has been concern that NBFIs might not get back their loans or investments," the BB said.

Under the circumstances, NBFIs will have to secure prior permission from the central bank to lend to their subsidiaries or associates and waive loans or interests.