A COMPREHENSIVE STUDY ON SOME

NBFI’S IN BANGLADESH
A COMPREHENSIVE STUDY ON SOME
NBFI’S IN BANGLADESH

Prepared For
Dr. Md. Shahidul Islam Zahid
Professor
Department of Banking and Insurance
Faculty of Business Studies
University of Dhaka
Prepared By
Israt Hasan
Id: 51942043, Batch: 42nd
Program: MBA (Evening)
Department of Banking and Insurance
Faculty of Business Studies
University of Dhaka

Date of Submission: 21nd May, 2022

 Letter of Transmittal
21nd May, 2022
Dr. Md. Shahidul Islam Zahid
Professor
Department of Banking and Insurance
Faculty of Business Studies
University of Dhaka

Subject: Submission of Thesis Paper under the title “A Comprehensive Study on Some
NBFI’s In Bangladesh”
Madam,
I am pleased to present the final Thesis paper on A Comprehensive Study on Some
NBFI’s In Bangladesh” prepared as per the requirement of MBA (Evening) program.
This paper is extremely valuable to me as it has helped me to gain knowledge and ideas
about the NBFI’s in Bangladesh. I have tried my level best to put in meticulous effort for
the preparation of this report within given time. Any sort of suggestions regarding this
paper would be gladly appreciated and I would be gratified if this paper serves its
purposes.
I will be thankful if you approve this effort.
Sincerely yours
…………………..
Israt Hasan
ID: 51942043
Batch: 42nd
Program: MBA (Evening)
Department of Banking and Insurance
University of Dhaka
 Declaration

I am Israt Hasan, a student of MBA (Evening), Department of Banking and Insurance,

Faculty of Business Studies, University of Dhaka, ID 51942043 and from 42nd batch, do
hereby declare that the Thesis paper on “A Comprehensive Study on Some NBFI’s In
Bangladesh” has been completed by me. This original and beneficial work is done by me
for the partial fulfillment of MBA degree, as a part of my academic curriculum. It has not
been submitted by me before for any other degree.

………………………..

Israt Hasan
ID: 51942043

Batch: 42nd

Program: MBA (Evening)

Department of Banking and Insurance

Faculty of Business Studies

University of Dhaka
 Supervisor’s Certificate

This is to certify that Israt Hasan is a student of MBA (Evening), Department of Banking
and Insurance, Faculty of Business Studies, University of Dhaka, ID: 51942043 and from
42nd batch. She has completed her Thesis paper entitled “A Comprehensive Study on
Some NBFI’s In Bangladesh”. She has completed Internship program under my
supervision for the partial fulfillment of the award of MBA degree and she has prepared
this thesis paper under my guidance. During the program she was found very active,
sincere and devoted to her assignment. I think this study will help her in the future to
develop her career.

I wish her every success in life.

…………………………

Dr. Md. Shahidul Islam Zahid

Professor

Department of Banking and Insurance

Faculty of Business Studies

University of Dhaka
 Acknowledgement

First of all, I cannot help being grateful to almighty Allah to give me the capability,
wisdom and patience to prepare this paper. And of course, next praise and grateful
appreciation goes to Dr. Md. Shahidul Islam Zahid, Professor, Department of Banking
and Insurance, Faculty of Business Studies, University of Dhaka and also the supervisor
of the report; for his guidance, instructions and suggestions from the very beginning till
the end.

This thesis paper is an accumulation of many people’s endeavor. Then I would like to
express my sincere gratitude to everyone who contributed towards preparing and making
this report successfully.

I am grateful to the authors, researchers, and authors of Books, Reports, Thesis papers
and journals that have helped me to prepare my thesis paper successfully. Finally, I am
grateful to my family and friends who have been always with me and offered selfless
support to me.
 Executive Summary
This report has been made as a segment of MBA (Evening) Program. My topic is “A
Comprehensive Study on Some NBFI’s In Bangladesh”. For this purpose data was
collected from 2012 to 2020.

In this report, I have tried to give a clear scenario of the industry, their performance and
specifically performance of some randomly selected NBFI’s. This report has mainly five
parts: Introduction, Literature Review & Organizational profile, Methodology, Data
analysis and Findings, Recommendations and Conclusion part.

This report provides the primary issues, the problems that are being faced and the process
that are being followed to mitigate the problems of NBFI’s. This study has compared the
companies trend from 2012-2020 and show an overall scenario of NBFI’s. Here in this
report data analysis have been showed with the graphical presentation. I have given some
recommendations according to my findings.

I have attempted to show the factors which are important to measure performance of
financial institutions. I have also tried to explain the prospects, problems and solution to
them a give a brief overview on the industry.
 Table of Contents

Title Page No
Chapter-1: Introduction
1.1 Introduction 2
1.2 Background Of The Study 2
1.3 Objectives Of The Study 3
1.3.1 Broad Objective 3
1.3.2 Specific Objective 3
1.4 Scope Of The Report 3
1.5 Limitation Of The Study 4
Chapter-2: Literature Review And Organizational Profile
2.1 Literature Review 6
2.2 Overview Of The Financial Structure 7
2.3 Financial Structure Of Bangladesh 7-8
2.4 Historical Background Of NBFI’s In Bangladesh 8
2.5 List Of NBFI’s In Bangladesh 9-10
2.6 Problems Faced By NBFI’s In Bangladesh 11-13
2.7 Organizational Overview Of 4 NBFI’s 13-23
Chapter-3: Methodology
3.1 Research Design 25
3.1.1 Research Methodology 25
3.1.2 Research Purpose 25
3.1.3 Types Of Data 25
3.1.4 Sample Size 26
3.1.5 Instruments 26
3.2 Data Collection 26
3.2.1 Data Source 26
3.3 Data Analysis 27
3.3.1 Descriptive & Prescriptive Analysis 27
3.3.2 Graphical Presentation 27
Chapter-4: Data Analysis And Findings
4.1 Investment Pattern Of NBFI 29-30
4.2 Contribution To GDP At Current Market Prices 30-31
4.3 Sectoral Contribution To GDP At Constant Prices 32-33
4.4 Comparative Analysis Of 4 NBFI’s 34-35
 4.5 Total Liability And Equity 36-37
4.6 Net Profit After Tax 38-39
4.7 Net Asset Value Per Share (NAV) 40-41
4.8 Earnings Per Share (EPS) 42-43
4.9 Return On Asset (ROA) 44-45
4.10 Return On Equity (ROE) 46-47
Chapter-5: Findings, Recommendation And Conclusion
5.1 Findings 49
5.2 Recommendations 50
5.3 Conclusion 50-51
References 52-53
 List Of Tables

Title Page No
List Of NBFI’s In Bangladesh 10-11
Investment Pattern Of NBFI 29
Contribution To GDP At Current Market Prices 30
Sectoral Contribution To GDP At Constant Prices 32
Total Asset 34
Total Liability And Equity 36
Net Profit After Tax 38
Net Asset Value Per Share (NAV) 40
Earning Per Share (EPS) 42
Return On Asset (ROA) 44
Return On Equity (ROE) 46
 List Of Graphs

Title Page No
Investment Pattern Of NBFI 29
Contribution To GDP At Current Market Prices 31
Sectoral Contribution To GDP At Constant Prices 33
Total Asset 35
Total Liability And Equity 36
Net Profit After Tax 38
Net Asset Value Per Share (NAV) 40
Earning Per Share (EPS) 42
Return On Asset (ROA) 44
Return On Equity (ROE) 46
 CHAPTER 1

INTRODUCTION

1|Page
1.1 INTRODUCTION

For any economy financial system is the most important. This financial system comprises
of Bank and Non-Banking Financial Institutions. Financial institutions are financial
intermediaries engaged in mobilization of fund from surplus unit to deficit unit on behalf
of customers.

As Bangladesh is an import based country that’s why Banks are the most powerful
financial intermediaries. There are 35 scheduled NBFI’s and 71 Banks working in
Bangladesh under direct supervision of Bangladesh Bank. As NBFI’s choose the
untouched sector of Banks that’s why they are choosing projects with high risk and that’s
why NBFI’s are blamed to be high risk takers.

NBFI’s help to increase production and development of capital market. Various

innovative and customized products and investment in untouched sectors by banks
making the NBFI’s stronger and helps to make a significant place in the financial market.

1.2 BACKGROUND OF THE STUDY

Financial institutions are service providers who connect parties involved in financial
transactions. Their services include investment, banking, insurance, exchanging
currency, brokerage firm etc. Financial institutions handle a wide variety of commercial
operations in the financial services sector.

Almost everyone in today's economy requires financial institution services regularly or

semi-regularly. Financial activities are a crucial feature of every economy, with people
and firms relying on credit intermediaries for trades and investments. The vast majority
of people are associated with financial organizations in some capacity. Because banks
and financial institutions are an essential element of the economy, governments feel it is
essential to control and regulate them.

2|Page
The purpose of this study is to is to analyze and find out the financial behavior and
contribution of NBFI’s in the financial sector of Bangladesh.

1.3 OBJECTIVE OF THE STUDY

1.3.1 Broad objective

The primary objective of this study is to analyze and find out the financial behavior and
contribution of NBFI’s in the financial sector of Bangladesh.

1.3.2 Specific objective

As our primary objective is to find out the financial behavior that’s why in this study we
will compare different financial factors to find out the actual scenario in different aspects.

1.4 SCOPE OF THE REPORT

Here I am working with financial data of 4 NBFI’s operating in Bangladesh which are
IDLC Finance Limited, IPDC Finance Limited, LankaBangla Finance Limited Finance
Ltd. and United Finance Ltd. In this report I am covering only the major factors which
determine the performance of the NBFI’s and compare them in different perspective. As
the financial data of 2021 is not available for all the companies that’s why in this report I
am doing work with data from 2012-2020 for my analysis.

3|Page
1.5 LIMITATION OF THE STUDY

• Limited information available in website.

• Can’t collect information other than available in website as it become protocol
issue of the companies.
• Time constraint.
• As the presentation and disclosure varies from company to company that’s why it
become difficult in some cases to cover all the important factors for analysis.

4|Page
 CHAPTER 2
LITERATURE REVIEW AND
ORGANIZATIONAL PROFILE

5|Page
2.1 LITERATURE REVIEW

From the very commencement of bank financial institutions plays very significant role in
economicand infrastructure development of Bangladesh. The history of NBFIs is not as
old as BIFs but withthe passage of time NBFIs become an integral part of the financial
system of Bangladesh.Goldsmith (1969) stresses opine that NBFIs alongside the banking
sector contributing prominentlyin influencing and mobilizing saving for investment.
Sufian (2007) opine that with the development of health of NBFIs health of capital market
is also increase. He also added that as the key player in the development of capital market
efficient and productive NBFIs lead the market based economy move forward.

With regard to the literature concerning the non-banking sector, limited number of studies
has been conducted so far in Bangladesh. Hossain and Shahiduzzaman (2002) focuses on
the importance of non-banking sector as a vehicle for the economic development of the
country and identifies the underlying problems existed within the sector. Ahmed and
Chowdhury (2007) deal with different features, contribution, and challenges faced by
NBFIs in Bangladesh. At the same time they also focus on performance analysis of NBFIs
by adopting traditional financial indicators like current ratio, debt-equity ratio,
productivity ratio, return on equity, etc. and report that in spite of the presence of several
constraints existed in the sector NBFIs have been performing considerably well. Nasreen
and Jahan (2007) conduct a research on leasing companies only regarding the accounting
practice. However, none of the above mentioned studies analyze the growth of the non-
banking sector of Bangladesh over a long period of time and their contribution of
economic growth, which creates an opportunity to deal with through an investigation.

6|Page
2.2 OVERVIEW OF THE FINANCIAL STRUCTURE

Overview of the financial structure combines of structure of the NBFI, their history, rules
and regulation, central bank’s intervention, their contribution in the economy, prospects,
problems and their operation.

As I am working with 4 NBFI’s of Bangladesh for my analysis that’s why here I will
present the scenario of this sector, the history of NBFI, their activities, their rules,
regulations, intervention of Bangladesh Bank and their performance in the economy.

2.3 FINANCIAL STRUCTURE OF BANGLADESH

The financial sector have 3 broad segments

1. Formal Sector
2. Semi-Formal Sector
3. Informal Sector

When we are talking about the sectors then there are several type of institutions which
lies in the sectors and they are given below-

Formal Sector

Formal sector includes all the financial institutions which are regulated by Bangladesh
Bank.

• Banks

7|Page
 • Non-Banking Financial Institutions
• Insurance companies
• Brokerage House
• Merchant Banks
• Micro Financing Institutions

Semi-Formal Sector

Those specialized financial institutions which are regulated but not under jurisdiction of
Bangladesh Bank, Security and exchange commission, Insurance Authority or any other
enacted financial regulator.

• House Building Finance Corporation

• Palli Karma Sahayak Foundation
• Samabay Bank
• Grameen Bank
• Non-Governmental Organizations

Informal Sector

This sector is private based sector and fully unregulated.

2.4 HISTORICAL BACKGROUNF OF NBFI’s IN BANGLADESH

10 Years after independence of Bangladesh the journey of NBFI’s was started in the year
of 1982.
The pioneer of NBFI in Bangladesh is Industrial Promotion and Development Company
(IPDC Finance Limited). Over time with the growing need and development of the
section the number of NBFI’s also increased which turns into 35 firms at the end of 2020.

8|Page
In terms of asset it was 74.84 billion in the year 2000 which as on 30 Jun 2020 became
860.3 billion. Where the contribution to GDP in the financial year 2010 was 4.34% turns
into 7.92% in the year 2015.

The importance of NBFI’s has been accelerated due to the development of new area for
business like term financing, real estate financing, equity financing, Venture capital
financing, project financing, financing to pilgrimage, merchant banking and so on. They
also with time start financing in textile, agriculture, small and cottage, chemicals, trading,
pharmaceuticals, food and bevage, transport, construction and engineering, leather
products etc. Major business of most of the NBFI’s are lease financing.

During the initial stage of development NBFI’s were governed by Bangladesh Bank as
per provision V Bangladesh Bank Order 1972. For better regulation and supervision of
the sector Non-Banking Financial Institutions Order was introduced in the year of
1989. For Statutory Liquidity requirement central bank announced a new act Financial
Institution Act in the year 1993. After this act all the NBFI’s are licensed and controlled
by this act.

2.5 LIST OF NBFI’s IN BANGLADESH

Number Name
1 Agrani SME Financing Company Limited
2 Aviva Finance Limited
3 Bangladesh Finance Limited
4 Bangladesh Industrial Finance Company Limited (BIFC)
5 Bangladesh Infrastructure Finance Fund Limited
6 Bay Leasing & Investment Limited
7 CVC Finance Limited

9|Page
8 Delta Brac Housing Finance Corporation Ltd. (DBH)
9 Fareast Finance & Investment Limited
10 FAS Finance & Investment Limited
11 First Finance Limited
12 GSP Finance Company (Bangladesh) Limited (GSPB)
13 Hajj Finance Company Limited
14 IDLC Finance Limited
15 Industrial and Infrastructure Development Finance Company (IIDFC) Limited
16 Infrastructure Development Company Limited (IDCOL)
17 International Leasing and Financial Services Limited
18 IPDC Finance Ltd
19 Islamic Finance and Investment Limited
20 LankaBangla Finance Ltd.
21 Lankan Alliance Finance Limited
22 Meridian Finance and Investment Ltd.
23 MIDAS Financing Ltd. (MFL)
24 National Finance Ltd
25 National Housing Finance and Investments Limited
26 People's Leasing and Financial Services Ltd
27 Phoenix Finance and Investments Limited
28 Premier Leasing & Finance Limited
29 Prime Finance & Investment Ltd
Saudi-Bangladesh Industrial & Agricultural Investment Company Limited
30 (SABINCO)
31 Strategic Finance & Investments Limited
32 The UAE-Bangladesh Investment Co. Ltd
33 Union Capital Limited
34 United Finance Limited
35 Uttara Finance and Investments Limited

10 | P a g e
2.6 PROBLEMS FACED BY NBFI’s IN BANGLAADESH

Source of Fund

Source of fund is a major problem faced by NBFI’s as there are growing number of
Banks, Financial institutions, Insurance Companies and customers have less confidence
in NBFI’s than Bank. So to grab fund they have to suffer more, have to collect money at
higher cost which also affect the interest rate of loans which also become a great
challenge.

When any NBFI offer higher rate to the customer or financial organization then it create
a bad practice in the market and again make the money market unstable and create
possibility of default.

High Cost of Fund

There are 71 Banks doing operation in Bangladesh where the money in the economy is
constant. So to grab fund and attract customers the main thing NBFI target is offering
higher interest rate to the customers. This become a practice in Bangladesh that NBFI’s
are offering higher rate of interest to the customers and this is happening because
Bangladesh Banks rule is not that much strict to NBFI’s like the banks. So it become a
positive thing for NBFI’s to grow and beside this it create a malpractice in the market and
make thing more difficult.

Asset Liability Mismatch

Asset liability mismatch is a common problem for all the NBFI’s as they can’t collect
huge amount of fund like banks and the loans are not that much favorable. As there is

11 | P a g e
always a gap between the tenure of asset and liability which create an interest rate
mismatch and tends to liquidity risk and loan default risk which considers as the major
risk for any financial institution.

Investment in High risk Portfolio

NBFI’s maximum time get those loans which are rejected by banks because of high risk
of them. As NBFI’s take deposit against higher rate so to generate profit they have to give
loan in higher rate. So they choose such kind of loans and offer them against higher rate.
There remains a higher possibility of bad loan and with time it become a practice in
Bangladesh which is obviously not a good practice.

Poor Capital Market Condition

From early 2010 we knock that the situation of capital market of Bangladesh is not good.
As it has a decreasing trend and now the number of participants in the capital market
reduces dramatically so collecting money from capital market also become a challenge
for NBFI’s .

Competition with Banks

With increasing banks which is 71 in number now so the situation is more challenging
for NBFI’s. As NBFI can’t raise fund and lend loan like banks and there are some
regulations of Bangladesh Bank. To compete with the increasing need of customers still
now NBFI’s are not able to offer service like banks which become a great weakness of
NBFI in the financial market.

Lack of Human Resource

With the growing performance pressure of NBFI’s they need efficient human resource.
But in Bangladesh still now there is lack of efficient human resource and with the
12 | P a g e
increasing remuneration of banks and Bangladesh Banks intervention regarding the
remuneration of employees of banks, it attract the efficient resources. More over other
facilities beside higher remuneration is missing in NBFI’s as they can’t afford them which
is also a reason of employee migration.

Weak Legal System

Legal system is very important for any NBFI as it is related to bad loan recovery. Legal
department of NBFI is not that much strong like Bank as a result they face unrecovered
loan loss. Like most of the country’s NBFI’s in Bangladesh right of depreciation for
leased.

2.7 ORGANIZATIONAL OVERVIEW OF 4 NBFI’s

1. IDLC Finance Limited

IDLC Finance Limited is a reputed NBFI working in Bangladesh. IDLC Finance Limited,
formerly known as Industrial Development Leasing Company of Bangladesh Limited
(IDLC FINANCE LIMITED).

It was established at 1985 by the initiation of IFC of the World Bank. The company was
formed via collaboration of International Finance Corporation, German Investment and
Development Company, Korea Development Financing Corporation, Aga Khan Fund for
Economic Development, Kookmin Bank, IPDC Finance Limited of Bangladesh and
Sadharan Bima Corporation. It has since emerged as a fully locally owned financial
institution.

They have AAA from The Emerging Credit Rating Limited (ECRL) for long term credit
rating and ECRL-1 short term credit rating.

13 | P a g e
Vision

The best financial brand in the country

Mission

Quality Growth, superior customer experience and Sustainable business practice

Products of IDLC Finance Limited

1. Retail Loans
• Home Loan
• Car Loan
• Personal Loan
2. Business Loan
• SME
• Purnota (Women entrepreneur Loan)
• Supply Chain Finance
• Corporate Loan
• Structured Finance
3. Deposit
• Term Deposit
• Priority
• Online Deposit
• Online DPS

14 | P a g e
CSR Activities

They are claiming that 32000+ individuals are benefited by their CSR activities. Their
CSR activities are mainly concentrated to 3 sectors

• Education
• Health Care
• Environment

Achievements

• One of the highest ROA amongst all banks and Financial institutions.
• Containing NPL ratio of 1.79% which is a sound performance to the double digit
industry average.
• Increased market share of 3.5% in the year 2019 to 4% in 2020.
• “Highly Satisfactory” certificate from corporate governance auditor regarding the
governance of the company.

2. IPDC Finance Limited

IPDC Finance Limited (previously known as "Industrial Promotion and Development

Company of Bangladesh Limited") is the first private sector financial institution of the
country established in November 28, 1981. Established by a distinguished group of
shareholders namely International Finance Corporation (IFC), USA, German Investment
and Development Company (DEG), Germany, The Aga Khan Fund for Economic

15 | P a g e
Development (AKFED), Switzerland, Commonwealth Development Corporation (CDC),
UK and the Government of Bangladesh. This is a public limited company.

Vision

Become the most passionate financial brand in the country with special focus on youth,
women and undeserved areas.

Mission

To enable our customers and communities to rise unbound, to live up to their fullest
potential by extending innovative financial solutions in a friendly, timely, transparent and
cost-effective manner.

Products of IPDC Finance Limited

1. Retail Product
• IPDC PRITI
• IPDC Home loan
• IPDC Auto Loan
• IPDC Personal Loan
• IPDC Deposit Schemes
 Annual Profit Scheme
 Fixed Deposit General
 Cumulative profit Scheme
 Monthly Profit Scheme
 Quarterly Profit Scheme
 Double Money Deposit Scheme
• IPDC Savings Scheme

16 | P a g e
  Deposit premium Scheme
 Millionaire Deposit Scheme
 Ultiflex Deposit Scheme
2. SME
• Lease Finance
• Long Term Finance
• Short Term Finance
• Joyee for Women
3. Corporate
• Lease Finance
• Term Loan
• Project Finance
• Short Term Loan
• Preference Share Investment
• Factoring
• Work Order Finance

CSR Activities

IPDC Finance Limited is doing their CSR on the following sectors

• Education
• Well-Being
• Cultural
• Emergencies
• Recreation
• Health
• Sanitation
• Environment

17 | P a g e
Achievements

• Maintains the lowest NPL ratio in the industry which is 1.38%.

• AAA rating from Emerging Credit Rating Ltd. For current capacity to meet debt
obligation for having an extremely low solvency risk from changes in business,
economic and financial conditions.
• Increase of 25.4% in net profit.

3. LankaBangla Finance Limited

LankaBangla Finance Limited started its journey long back in 1997 as a joint-venture
financial institution with multinational collaboration having license from Bangladesh
Bank under Financial Institution Act-1993. Now LankaBangla Finance Limited is the
country’s leading provider of integrated financial services including corporate financial
services, retail financial services, SME financial services, stock broking, corporate
advisory and wealth management services. Under the broadest umbrella of products and
service offerings, they are the lone financial institution to operate credit card (MasterCard
and VISA) . Since 2006 LankaBangla Finance Limited has been listed in both DSE &
CSE in Bangladesh.

Mission

• Be a growth partner for our customers, ensuring financing and superior experience
• Maintain a culture of meritocracy in the DNA of the company
• Be sustainable and ensure quality returns to our valued shareholders
• Uphold efforts to develop our community

18 | P a g e
Vision

To be the most preferred financial service provider in creating, nurturing and maximizing
value to the stakeholders, thereby, GROWING TOGETHER.

Products of LankaBangla Finance Limited

a. Retail Financial Service

1. Individual Deposit Scheme
• Swasti Secured Money Builder
• Protiva Secured Money Builder
• Double Money
2. Cards
• Titanium Master Card
• MasterCard Gold
• MasterCard Classic
• VISA Platinum
• VISA Gold
• VISA Classic
• MasterCard Shikha Titanium
• MasterCard Shikha Gold
• MasterCard Shikha Classic
3. Loans
• Personal Loan ( Freedom of Life)
• Doctors Loan
• Personal Loan for Landlady/Landlord
• Personal Loan for Businessmen ( BONIK)
• Personal Loan for Govt. Employee ( HOPE)
• Personal Loan for Teacher (BEACON)

19 | P a g e
 • Loan Against TDR
b. SME Financial Service
1. Small Business
2. Emerging and Medium Business
3. SME Deposit Scheme
c. Corporate Financial Service
1. Corporate and Institutional Services
• Term Finance
• Short Term Finance
• Bridge Finance
• Work Order Finance
• Revolving Finance
• Loan Against TDR
• Project Finance
• Club Finance
• Lease Finance
2. Supply Chain Finance
• Factoring Finance
• Distributor Financing
• Reverse Factoring
3. Project and Structured Finance Unit
• Project Finance
• Structured Finance
• Corporate Advisory Service
4. Corporate Deposit Scheme
• Classic Term Deposit
• Employee Provident Fund

CSR Activities

20 | P a g e
LankaBangla Finance Limited is doing their CSR on the following sectors

• Health
• Education
• Environment

Achievements

• ROE stands at 10.00% up by 4.73%.

• ROA increases to 1.18% by 59 bps
• Capital adequacy ratio stands at 18.31%.
• NPL stands at 4.70% down by 89 bps from 5.59%.

4. United Finance Limited

United Finance Limited started its journey as a Financial Institution in 1989. We are
affiliated with Duncan Brothers (Bangladesh) Limited, Camellia PLC (United Kingdom)
and Lawrie Group PLC (United Kingdom) and its associated concerns who have a
combined presence of over 150 years in Bangladesh.

Vision

To be the LEADING high-quality service provider in the markets we serve

Mission

• Devote continuous effort to improve products and services for sustaining a

competitive edge

21 | P a g e
 • Ensure service excellence by leveraging motivated human resources and
technology
• Manage risks and costs to ensure sound financial performance and adequate return
on all investments

Products of United Finance Limited

1. DPS
• Basic DPS
• Easy Millionaire Scheme
• Millionaire Plus Scheme
• Insured Education Scheme
2. Fixed Deposits
• Term Deposit
• Monthly/Quarterly Earner Deposit
• Deposit Scheme for Women
3. Loans
• Personal Loan
 Home Loan
 Loan against Deposit
• Business Loan
 Short Term Finance
 Long Term Finance

CSR Activities

United Finance Limited is doing their CSR on the following sectors

• Health

22 | P a g e
Achievements

Maintained sustainable growth

23 | P a g e
 CHAPTER 3
METHODOLOGY

24 | P a g e
3.1 RESERCH DESIGN
The framework of research methods and processes is known as research design. Data
collection, observation, and analysis are all part of the research design. In this study, I
examined a comparative study on some NBFI’s in Bangladesh using quantitative data. I
have exhibited trend analysis which is done in the quantitative data analysis approach for
analyzing numerical data.

3.1.1 Research Methodology

In my paper, I have used the quantitative research technique. The purpose of
quantitative research technique is to show my research in tables and graphs for better
understanding as most of my data are quantitative.

3.1.2 Research Purpose

Analyze and find out the financial behavior and contribution of NBFI’s in the financial
sector of Bangladesh.

3.1.3 Types of Data

There are two fundamental categories of data: qualitative and quantitative data. Data that
can be observed and recorded but is not numerical is referred to as qualitative data. The
data set that may be used for mathematical computations and statistical analysis is
quantitative data. I used a quantitative technique to display the research findings and a
qualitative one to discuss them.

25 | P a g e
3.1.4 Sample Size

I chose NBFI’s for my research. For my research I have gathered date from 2012-2020
and tried to a short glimpse of the industry, their contribution in our economy and a
comparative analysis on NBFIs.

3.1.5 Instruments

I have used trend analysis as my research instrument.

3.2 DATA COLLECTION

Primary and secondary data are the two main forms of information. All Information came
from secondary sources such as annual bank reports, various websites, articles, journals,
and research papers.

3.2.1Data Source

This study is being prioritized by the secondary sources of data to ascertain the objectives,
such as-

• Website of Bangladesh Bank

• Different newspapers and articles
• Previous Research Studies and relevant books.
• Various journals and publications.
• Website of Non-Banking Financial Institutions
• Google Scholar and different online resources.

26 | P a g e
 3.3 DATA ANALYSIS
Data analysis is a statistical process in which data is studied through several procedures
such as filtering, transforming, and structuring data to identify useful information. To
examine the data for my report, I have used specific statistical tools.

3.3.1 Descriptive & Prescriptive Analysis

Descriptive data analysis is the core of all data insight, and it examines historical data and
reports on what occurred, frequently using dashboards. Prescriptive data analysis
integrates the information obtained from data analysis and creates a strategy to address
the issue at hand. I used both analyses to improve the quality of my report.

3.3.2 Graphical Presentation

I applied some graphical texture from the collected data in this report to make the analysis
easier to understand. To execute the graphical presentation and make it more simply
understandable for the reader, I used MS Word.

27 | P a g e
 CHAPTER 4

DATA ANALYSIS AND FINDINGS

28 | P a g e
4.1 INVESTMENT PATTERN OF NBFI

NBFI’s invest in different sectors but major of the portion is invested in the industry.

Investment pattern of NBFI's as on 30 Jun 2020

Invested Sector Percentage
Industry 46.45%
Real Estate 19.41%
Margin Loan 2.22%
Trade and Commerce 13.84%
Merchant Banking 3.34%
Agriculture 2.30%
Others 12.44%

Investment pattern of NBFI's as on 30 Jun 2020

Industry Real Estate Margin Loan Trade and Commerce

Marchant Banking Agriculature Others

29 | P a g e
Here from the graph we can see that NBFI’s investment is more concentrated to Industry.
Their second highest investment sector is real estate. They have lowest investment in
Agriculture.

4.2 CONTRIBUTION TO GDP AT CURRENT MARKET PRICES

(In Crore Taka)

Year (GDP) at Current Market Prices

2011-12 2,381.00
2012-13 2,590.00
2013-14 2,810.00
2014-15 3,180.00
2015-16 3,485.00
2016-17 4,008.00
2017-18 4,633.00
2018-19 4,983.00
2019-20 5,592.00
2020-21* 6,280.00
Source: Bangladesh Bureau of Statistics (BBS) *Provisional.

30 | P a g e
 Contribution to GDP

7000
6000
5000
4000
3000
2000
1000
0

Year

Here we can see that from 2011 to 2021 the growth is constant. Here in the Fiscal year
2011-12 the contribution to GDP was 2381 core TK and in year 2020-21 it become 6280
core TK which indicates that NBFI’s are doing better with time and make a remarkable
step. Here we can also see that in the fiscal year 2020-21 they contributed 688 core TK
more than fiscal year 2019-20 despite of pandemic which is also a good indication.

31 | P a g e
4.3 SECTORAL CONTRIBUTION TO GDP AT CONSTANT PRICES

(In Percentage)

(Base Year: 2005-06)

Year Sectoral Contribution to GDP Sectoral Contribution to GDP

at Constant prices (Bank) at Constant prices (NBFI's)
2011-12 17.61 2.33
2012-13 10.87 3.14
2013-14 8.33 3.63
2014-15 8.49 4.68
2015-16 8.85 4.54
2016-17 9.95 9.06
2017-18 8.51 9.05
2018-19 7.38 11.55
2019-20 2.65 9.20
2020-21* 3.63 9.27
Source: Bangladesh Bureau of Statistics (BBS) *Provisional.

32 | P a g e
 SECTORAL CONTRIBUTION TO GDP AT CONSTANT
PRICES
20
18
16
14
12
10
8
6
4
2
0
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21*

 Sectoral Contribution to GDP at Constant prices (Bank)

 Sectoral Contribution to GDP at Constant prices (NBFI's)

Here we can see that from 2011 to 2021 the growth is constant. Here in the Fiscal year
2011-12 the contribution Percentage to GDP was 2.33% where Banks contributed 17.61%
which is a huge gap we can see. But from the chart we can see that the growth of NBFI
is constant where we can see that Bank’s performance compare to NBFI is not
satisfactory. Banks have a downward trend. If we notice the table and graph then we can
find out that in the fiscal year 2019-20 and 2020-21 NBFI contributed 9.20% and 9.27%
where Banks contributed 2.65% and 3.63%. This scenario shows that with time the
performance of NBFI’s is growing better than Banks.

33 | P a g e
4.4 COMPARATIVE ANALYSIS OF 4 NBFI’s

As I have chosen 4 random NBFI’s for my analysis so here I have done some major
comparison of them.

1.0 TOTAL ASSET

BDT in mn

Year IDLC Finance IPDC Finance LankaBangla United Finance

Limited Limited Finance Limited Limited
2012 37,784.00 7,114.51 25,339.00 11,817.00
2013 50,429.00 7,758.92 32,648.00 13,929.00
2014 58,927.00 7,743.86 39,129.00 15,847.00
2015 73,434.00 8,202.24 50,448.00 19,375.00
2016 79,359.00 22,576.95 63,935.00 20,675.00
2017 95,687.00 39,289.00 85,443.00 23,944.00
2018 109,166.00 50,511.00 87,889.00 24,073.00
2019 117,385.00 64,402.00 84,363.00 21,730.00
2020 126,874.00 75,969.00 81,835.00 21,560.00

34 | P a g e
 Total Asset

140,000.00

120,000.00

100,000.00

80,000.00

60,000.00

40,000.00

20,000.00

-
2012 2013 2014 2015 2016 2017 2018 2019 2020

IDLC IPDC LankaBangla UFL

Here in this graph we can see that the total asset of IDLC Finance Limited is the
highest than other 4 NBFI I have chosen. From this graph we can say that IDLC
Finance Limited is more capable to pay their debt than IPDC Finance Limited,
LankaBangla Finance Limited and United Finance Limited. Here we can see that
asset of IPDC Finance Limited is lower from the beginning but from the year 2016
their asset started growing which we can see from the graph. They have their
highest Total Asset in the year 2020 and lowest in the year 2012.
LankaBangla Finance Limited and United Finance Limited have a stable growth
from the beginning which is also a good indication. Though IDLC Finance
Limited has higher asset than others but it does not mean that others are not doing
good. LankaBangla Finance Limited have their highest Total Asset in the year
2018 and lowest in the year 2012. United Finance Limited have their highest Total
Asset in the year 2018 and lowest in the year 2012.
From the year 2012-2015 IPDC Finance Limited have a slow growth what we can
see from the graph but from 2016 it started growing and it continues till 2020.
They have their highest Total Asset in the year 2020 and lowest in the year 2012.
Compare to liability all of them are doing good in the industry.

35 | P a g e
4.5 TOTAL LIABILITY AND EQUITY
BDT in mn

Year IDLC Finance IPDC Finance LankaBangla United Finance

Limited Limited Finance Limited Limited
2012 30,987.00 7,114.51 18,672.00 11,816.00
2013 42,884.00 7,758.92 25,619.00 13,929.00
2014 50,471.00 7,743.86 31,997.00 15,846.00
2015 63,591.00 8,202.24 44,099.00 19,375.00
2016 67,446.00 22,576.95 57,164.00 20,675.00
2017 81,548.00 39,289.00 77,014.00 23,944.00
2018 93,858.00 50,511.00 77,954.00 24,072.00
2019 100,883.00 64,402.00 74,708.00 21,730.00
2020 109,275.00 75,969.00 71,564.00 21,560.00

TOTAL LIABILITY AND EQUITY

120,000.00

100,000.00

80,000.00

60,000.00

40,000.00

20,000.00

-
2012 2013 2014 2015 2016 2017 2018 2019 2020

IDLC IPDC LankaBangla UFL

36 | P a g e
Here from the graph we can see that IDLC Finance Limited have a highest total
liability and equity portfolio than other 3 NBFI’s through 2012-2020 and they
have a stable growth through the years. They have their highest Total Liability
and Equity in the year 2020 and lowest in the year 2012.
From the year 2012 we can see that IPDC Finance Limited had the lowest total
liability and equity but from 2016 like total asset that we have seen from the
previous graph that they are growing and in the year 2020 they become the 2nd
largest liability and equity. Their performance shows good here. They have their
highest Total Liability and Equity in the year 2020 and lowest in the year 2012.
Both LankaBangla Finance Limited and United Finance Limited have a stable
growing trend from the beginning and didn’t fluctuate so much. But if we talk
about LankaBangla Finance Limited, from the beginning they having second
largest liability and equity among the 4 but in the year 2020 IPDC Finance Limited
beat them and become the second. LankaBangla Finance Limited have their
highest Total Liability and Equity in the year 2018 and lowest in the year 2012.
United Finance Limited have their highest Total Liability and Equity in the year
2018 and lowest in the year 2012.

37 | P a g e
4.6 NET PROFIT AFTER TAX
BDT in mn

Year IDLC IPDC LankaBangla United

Finance Finance Finance Limited Finance
Limited Limited Limited
2012 589.00 128.60 348.00 229.00
2013 811.00 141.98 955.00 266.00
2014 1,154.00 165.51 454.00 324.00
2015 1,244.00 240.19 421.00 343.00
2016 1,496.00 303.09 796.00 313.00
2017 2,277.00 1,926.00 1,926.00 256.00
2018 2,171.00 444.00 444.00 277.00
2019 1,700.00 508.00 508.00 245.00
2020 2,541.00 979.00 979.00 211.00

NET PROFIT AFTER TAX

3,000.00

2,500.00

2,000.00

1,500.00

1,000.00

500.00

-
2012 2013 2014 2015 2016 2017 2018 2019 2020

IDLC IPDC LankaBangla UFL

38 | P a g e
Net profit after tax considers as the first factor that one investor see and predict
about the company initially before the others. Here from the graph we can see that
from 2012 among 4 NBFI’s IDLC Finance Limited has the largest net profit after
tax which is clearly visible in the graph. They have their highest Net Profit after
Tax in the year 2020 and lowest in the year 2012.
LankaBangla Finance Limited in the year 2012 had the 2nd largest net profit after
tax and in the year 2013 beat IDLC Finance Limited but then maintained the 2nd
position among 4 but we can see from the graph that the fall of net profit after tax
is really large. Then from the year 2016 again started growing and in the year
2017 their jump of net profit after tax is really good which is visible in the graph.
Then in the year 2018 they again fall and from then till 2020 they have a positive
trend of growth. They have their highest Net Profit after Tax in the year 2017 and
lowest in the year 2012.
IPDC Finance Limited from the year 2012 had a positive growth and in the year
2017 the growth of net profit after tax is really high which we can see from the
graph but fall in the year 2018 like LankaBangla Finance Limited and after then
they have a stable growth ahead. They have their highest Net Profit after Tax in
the year 2017 and lowest in the year 2012.
Now if we talk about United Finance Limited then we can see from the graph that
they having a comparatively stable net profit after tax. United Finance Limited’s
net profit after tax seems lower than the others but it shows they are more stable
than LankaBangla Finance Limited and IDLC Finance Limited which is
obviously a good sign. They have their highest Net Profit after Tax in the year
2015 and lowest in the year 2020.

39 | P a g e
4.7 NET ASSET VALUE PER SHARE (NAV)

Year IDLC Finance IPDC Finance LankaBangla United Finance

Limited Limited Finance Limited Limited
2012 18.67 13.38 13.99 17.63
2013 21.33 13.63 15.59 16.98
2014 25.97 15.13 16.79 17.29
2015 30.97 16.33 19.73 17.49
2016 35.56 7.50 12.41 17.29
2017 33.41 8.40 15.45 16.95
2018 36.17 10.10 18.23 16.67
2019 37.18 15.00 17.60 16.98
2020 40.41 16.30 18.73 17.11

NET ASSET VALUE PER SHARE (NAV)

45.00
40.00
35.00
30.00
25.00
20.00
15.00
10.00
5.00
-
2012 2013 2014 2015 2016 2017 2018 2019 2020

IDLC IPDC LankaBangla UFL

NAV is very important for any company as it shows funds per share intrinsic
value. When any company have higher NAV that means that their investment is
growing well and that is save. From the graph we can see that from the year 2012
IDLC Finance Limited have the highest NAV than other 4. NAV is a little low in

40 | P a g e
the year 2017 but then it again started growing. They have their highest NAV in
the year 2020 and lowest in the year 2012.
IPDC Finance Limited have a stable position from the year 2012 but at the year
2016 they became the lowest NAV than other 3 and after that till 2020 they grow
and it continues till 2020. They have their highest NAV in the year 2015 and
lowest in the year 2016.
LankaBangla Finance Limited also had a positive growth trend from the year 2012
and like IPDC Finance Limited in the year 2016 they fall and after that they have
a positive growth. Here we can say that their net asset value trend is much
satisfactory. They have their highest NAV in the year 2015 and lowest in the year
2016.
Now if we say about United Finance Limited in the year 2012 they have the 2nd
highest NAV and till 2020 they didn’t fluctuate so much like IPDC Finance
Limited and LankaBangla Finance Limited. Like IPDC Finance Limited
LankaBangla Finance Limited had a positive trend from 2012 but in the year 2016
their NAV fall and after that they have a stable growth. They have their highest
NAV in the year 2012 and lowest in the year 2020.

41 | P a g e
4.8 EARNING PER SHARE (EPS)

Year IDLC Finance IPDC Finance LankaBangla United Finance

Limited Limited Finance Limited Limited
2012 2.34 0.85 1.18 2.07
2013 3.23 0.94 3.38 2.09
2014 4.59 1.09 1.60 2.31
2015 4.95 1.59 1.53 2.22
2016 5.95 2.00 2.87 1.84
2017 6.13 1.03 3.52 1.44
2018 5.76 1.38 0.81 1.48
2019 4.51 1.72 0.94 1.31
2020 6.74 1.90 1.81 1.13

Chart Title
7.00

6.00

5.00

4.00

3.00

2.00

1.00

-
2012 2013 2014 2015 2016 2017 2018 2019 2020

IDLC IPDC LankaBangla UFL

EPS is the portion of dividend that gives against a share of the company. Here we
can see that from 2012 IDLC Finance Limited have the largest EPS among the 4
NBFI’s. Though they have the highest EPS but there is a fall of EPS in the year
2018 which continues till 2019 but in the year 2020 they again grow and having

42 | P a g e
the highest EPS from 2012-2020. IPDC Finance Limited have a couple of
fluctuation in the years which we can see from the graph. They have their highest
EPS in the year 2016 and at the year 2017 there is a drop of EPS which again
started rising from 2018. They have their highest EPS in the year 2012 and lowest
in the year 2020.
LankaBangla Finance Limited had the 3rd highest EPS in the year 2012 but from
the graph we can see that at the year 2013 they had the highest EPS among the 4.
Then there is a fall of EPS in the year 2014 which continues till 2015 and from
2016 to 2017 there is a rise of EPS which again fall in the year 2018 and then till
2020 there is a growing trend we can see. They have their highest EPS in the year
2017 and lowest in the year 2019.
In the year 2012 IPDC Finance Limited has the lowest EPS which we can see
from the graph and the table and after that they started growing. Then in the year
2017 their EPS again fall in the year 2017 and from 2018 they started rising. There
is a couple of fluctuations in the EPS. They have their highest EPS in the year
2016 and lowest in the year 2012.
From the year 2012 United Finance Limited have the combination of growth and
declining trend in their EPS. They started as 2nd highest EPS in the year 2012 and
that growth continues till 2014 but from 2015 we can see that there is a declining
trend of EPS and that continues till 2020. At the year of 2020 they have the lowest
EPS from 2012-2020. They have their highest EPS in the year 2014 and lowest in
the year 2020.

43 | P a g e
4.9 RETURN ON ASSET (ROA)

Year IDLC Finance IPDC Finance LankaBangla United Finance

Limited Limited Finance Limited Limited
2012 2.07% 1.85% 1.46% 1.94%
2013 1.52% 1.91% 3.29% 1.91%
2014 2.28% 2.14% 1.26% 2.04%
2015 2.20% 3.01% 0.94% 1.77%
2016 2.33% 2.00% 1.39% 1.51%
2017 2.60% 1.10% 2.58% 1.07%
2018 2.12% 1.00% 0.51% 1.15%
2019 1.50% 1.00% 0.59% 1.13%
2020 2.08% 1.00% 1.18% 0.98%

RETURN ON ASSET (ROA)

3.50%

3.00%

2.50%

2.00%

1.50%

1.00%

0.50%

0.00%
2012 2013 2014 2015 2016 2017 2018 2019 2020

IDLC IPDC LankaBangla UFL

ROA is used to evaluate a company’s financial health. It shows how efficiently a

company is using its assets to generate profit. If we firstly say about IDLC Finance
Limited then in the year 2012 they have the highest ROA but in the year 2012 it

44 | P a g e
was the lowest among 2. Then in the year 2014 and 2015 there is a fluctuation and
they have their highest ROA in the year 2017. From the year 2018 there is again
a downward slopping and in the year 2019 they have the lowest ROA which again
rise in the year 2020. They have their highest ROA in the year 2013 and lowest in
the year 2019.
Now if we say about IPDC Finance Limited then we can see that from 2012 to
2015 they have a upward slopping and at the year of 2015 they have the highest
ROA among 4 and it is the highest ROA of IPDC Finance Limited in the journey
of 2012-2020. Then from 2016 we can see there is a downward slopping of ROA
which continues till 2020. They have their highest ROA in the year 2015 and
lowest in the year 2018 and 2019.
LankaBangla Finance Limited started with the lowest ROA in the year 2012 but
in 2013 there is a massive growth and then they again fall in the year 2014.
Downward slopping of ROA continues till 2015 then we can see an upward
slopping till 2017. But in the year 2018 there is again a fall of ROA and after that
the growth is stable and seems no massive growth or decline in the lifetime of
2012-2020. They have their highest ROA in the year 2013 and lowest in the year
2018.
From 2012 United Finance Limited had a stable growth of ROA till 2014 but from
2015 they started declining and this trend continues till 2017. They have their
lowest ROA in the year 2017 and after that their ROA again started growing but
we can see from the graph that 2020’s ROA is less than 2019. They have their
highest ROA in the year 2014 and lowest in the year 2020.

45 | P a g e
4.10 RETURN ON EQUITY (ROE)

Year IDLC Finance IPDC Finance LankaBangla United Finance

Limited Limited Finance Limited Limited
2012 16.44% 6.34% 5.71% 11.72%
2013 13.31% 6.88% 14.34% 12.29%
2014 20.95% 7.22% 6.59% 13.36%
2015 20.39% 9.71% 6.37% 12.71%
2016 21.29% 11.50% 12.29% 10.67%
2017 21.15% 11.40% 25.66% 8.47%
2018 16.55% 13.10% 4.90% 8.88%
2019 12.29% 12.10% 5.27% 7.71%
2020 17.37% 12.10% 10.00% 6.59%

RETURN ON EQUITY (ROE)

30.00%

25.00%

20.00%

15.00%

10.00%

5.00%

0.00%
2012 2013 2014 2015 2016 2017 2018 2019 2020

IDLC IPDC LankaBangla UFL

46 | P a g e
ROE indicated how efficiently the company is using the shareholders’ investment
to generate profit. It also indicates management’s efficiency of using investment.
Here from the graph we can see that in the year 2012 IDLC Finance Limited have
the highest ROE in the year 2012 which has a downward trend in the year 2013.
But in the year 2014 it had a good rise of ROE and the growth trend maintained
till 2017. But in the year 2018 it again decreases and continues till 2019 and in
2020 they again grow. They have their highest ROE in the year 2016 and lowest
in the year 2019.
IPDC Finance Limited’s ROE seems more stable than IDLC Finance Limited as
they have no major rise and fall. From 2012 they have a rise in ROE and continues
till 2018 and there is a decrease in 2019 but again started grow in 2020. Lanka
Bangla have a couple of rising and declining trend in their ROE. From the graph
we can see that from 2012-2013 they have a growing trend then have a downward
slopping in the year 2014. From 2015 ROE again started to grow and in the year
2017 they have the highest ROE and in that year they have the highest ROE
among the chosen 4 NBFI’s. Then in the year 2018 we can see again a huge down
of ROE and after that from 2019 they again started to grow which continues till
2020 but no massive growth seen like 2017 in the life time of 2012-2020 for IPDC
Finance Limited. They have their highest ROE in the year 2016 and lowest in the
year 2019.
Here we can see that LankaBangla Finance Limited had risen of ROE from 2012
to 2013 but at the year 2014 there is a declined ROE then again started rising and
in the year 2017 having the highest ROE and at the year 2018 there is a massive
fall of ROE and after that again started growing till 2020. They have their highest
ROE in the year 2017 and lowest in the year 2018.
At the year 2012 United Finance Limited had the second highest ROE among 4
NBFI’s and the growth continues till 2014. From 2015 the ROE started declining
and it continues till 2017. Then in the year 20118-2020 there is a fluctuation of
ROE and they have their highest ROE in the year 2014 and lowest in the year
2020.

47 | P a g e
 CHAPTER-5
FINDINGS, RECOMMENDATION AND
CONCLUSION

48 | P a g e
 5.1 FINDINGS

This chapter presents the study's findings as well as its interpretation and the
significant findings are given below:

• Most of the NBFI's investment is industry based.

• Even under severe liquidity pressure, they could mobilize their funds
through well-planned allocation.
• 5.64% more contribution is sectoral GDP than bank.
• Contribution to GDP from NBFI's is increasing day by day. In the fiscal
year 2011-2012 it was 2,381.00 Crore TK which turns into 6.280.00 Crore
TK in fiscal year 2020-2021.
• In the fiscal year 2020-2021 contribution to GDP was 9.27%
• Net profit fluctuation is noticeable in this sector for some of the
companies.
• Net asset value is quite satisfactory
• EPS is not growing in nature
• No strong bindings in investment and business policy like banks.
• Weak Management in NBFI's.
• Cost of fund is greater than banks.
• Weak control of central bank compare to other developed countries.
• No set rule for compensation to the employees which is applicable for
banks.
• Mismatch in tenure of asset and liability which is a big problem in this
sector.
• The legal system is not that much upgraded like banks.

49 | P a g e
5.2 RECOMMENDATIONS

• NBFI‘s should decentralize their investment and here Bangladesh Bank

can impose specific investment rules for NBFI’s.
• If Bangladesh Bank give more emphasize on NBFI’s and continuously
looks after them and brought under strong monetization then this sector
can contribute more in our GDP.
• Should emphasize more in the deposit collection and giving loan. Tenure
should be considered in case of investment.
• Like banks Bangladesh bank should set a ceiling of interest for NBFI’s for
a good business practice.
• Recently Bangladesh Bank set a remuneration regulation for all banks and
such kind of regulation should be imposed on NBFI’s to mitigate human
resource migration.
• Bangladesh Bank should emphasize on improving legal system of NBFI’s
by setting some rules to improve this sector.
• Continuous monitoring of Bangladesh Bank can improve the performance
of this sector.

5.3 CONCLUSION

Rising Number of NBFI’s in Bangladesh is an indication that financial market

of Bangladesh are accepting NBFI’s. NBFI’s are not only creating alternatives
to the customers but also help to maintain a sound completion in the market.
Timely honored and highly standardized product design strategy makes widen
NBFI’s to widen their activities. Role of NBFI’s in the financial crisis is
notable. Diversified and customized product helps NBFI’s to grow in the

50 | P a g e
financial market and make a remarkable position. NBFI’s help to maintain a
steady growth in the economy.

The purpose of this paper is to analyze the industry and make a comparative
analysis on some important factors of NBFI’s in Bangladesh.

In this paper we have analyzed the overall sector of NBFI and their
performance. I have tried out to show the competition, limitation, scope,
regulation of Bangladesh Bank etc. Here I have observed that over time the
competition and challenges of NBFI’s are increasing and with that
performance is also getting better. Beside the prospects there are some
challenges of NBFI’s are scarcity of fund, high-cost and low-cost deposit
mobilization which creates more competition and negatively growth of
NBFI’s. On the other side easy reporting, Govt. patronization, more
coordination bank financing institution help NBFI business develop and grow.

51 | P a g e
 REFERENCES

Bibliography

• IDLC Finance Limited official website

• IPDC Finance Limited official website
• LankaBangla Finance Limited official website
• United Finance Limited official website
• Bangladesh Bank official website
• Ministry of Finance official website
• Annual reports of IDLC Finance Limited (2012-2020)
• Annual reports of IPDC Finance Limited (2012-2020)
• Annual reports of LankaBangla Finance Limited (2012-2020)
• Annual reports of United Finance Limited (2012-2020)
• Hossain, M., & Shahiduzzaman, M. (2002). Development of non bank financial
institutions to strengthen the financial system of Bangladesh. Journal of
Bangladesh Institute of Bank Management (BANK PARIKRAMA)
• Ahmed, M. N., & Chowdhury, M. I. (2007). Non-bank financial institutions in
Bangladesh: An analytical review. Working Paper Series: WP 0709, Bangladesh
Bank, Bangladesh.

Websites

• https://idlc.com/
• https://www.ipdcbd.com/
• https://www.lankabangla.com/
• https://www.unitedfinance.com.bd/
• https://mof.gov.bd/
• https://mof.portal.gov.bd/site/page/28ba57f5-59ff-4426-970a-
bf014242179e/Bangladesh-Economic-Review-2021

52 | P a g e
• https://www.researchgate.net/publication/277103383_Prospects_of_Non_Ba
nk_Financial_Institutions_and_Money_Market_Indication_from_Banglades
h_Bangladesh_Economic_Association_Conference_Program_19th_Biennial
_Conference-8th_-10th_January_2015_Dhaka
• https://www.researchgate.net/publication/305095922_Issues_and_Challenge
s_of_Non-Bank_Financial_Institutions_in_Bangladesh

53 | P a g e