NBFIs log record foreign investment to equity capital in FY22

Non-bank financial institutions received $263 million foreign investment to equity capital last year, according to the central bank, which alone accounts for 65% of such investment in more than the past one and a half decades until June this year.

Non-bank financial institutions (NBFI) received $267 million foreign investment in FY22. Of it, 98% investment or $263 million came in the sector's equity capital. From 2006 to June this year, the total investment in NBFIs' equity capital was $403 million.

Equity capital is funds paid into a business by investors in exchange for ownership share. A top central bank official termed the investment spike "very positive" while sector people attributed it to good governance in NBFIs.

Infographic: TBS

Sector people said foreign investors have so far invested in several renowned NBFIs, including IPDC Finance and LankaBangla Finance, as the financial institutions with domestic and foreign funding are making good profits. The foreign investors are reinvesting their profits in equity capital.

Besides, Strategic Finance and Investments Limited has brought new foreign investment in their company ownership, they said, adding that those factors altogether drove up the foreign investment in NBFI equity capital in FY22.

According to the Strategic Finance's official record, the NBFI received investments from US-based Statisticker and Canadian Maple Strategic Wealth Management.

Irteza Ahmed Khan, managing director and CEO of Strategic Finance, said the Bangladesh Bank approved them with the condition that 50% of the total capital would have to come from abroad.

"Accordingly, we have brought foreign institutional investment," he told The Business Standard.

He said foreign investors consider a number of indicators before putting the money into a business. "All of our gauges ranging from deposit-loan ratio to cash liquidity are good. Besides, we do not have any classified loan."

An analysis of the net foreign direct investment (FDI) shows NBFIs received $120 million foreign investments – a large chunk in the equity capital – in FY19. In that year, other segments of the NBFIs failed to secure significant foreign investment, as the NBFIs witnessed paltry equity capital investments by foreign investors in the next two years.

Terming the investment spike "very good news for our country", Bangladesh Leasing and Finance Companies Association Chairman Mominul Islam said all the NBFIs with domestic and foreign funding are doing very well, due mostly to their good governance.

"Due to good governance, these institutions have low non-performing loans and are able to make profits," he told The Business Standard.