Non Bank Financial Institutions in Bangladesh: Lens through Financial Development

Abstract

In the financial market of Bangladesh, besides the typical mainstream banking system, non banking financial institutions are emerging as a crucial and indispensable part by serving the gap of credit with diversified financing modes. The importance of the NBFI sector of Bangladesh leads to this study to unearth the development and financial condition over a decade. Data for this study have been collected from the annual report of Bangladesh Bank and the Financial Institutions Division of the Ministry of Finance, covering the period from 2013 to 2023. To analyze the data, simple statistical tools and techniques have been used. The results show that the non performing loan was rising during the study period; the NBFIs were losing profit, which is expected to be reversed for the good governance initiatives taken at present. The deposits are increasing over the year, which is helping to increase the earnings, and also the loans and advances are increasing because of the easy process and good rate of interest. The CAMELS rating of the NBFI's is very moderate since a very small number of companies are seen to be rated strong after the year 2019.