Explaining financial performance and funding constraints in NBFIs: Human capital, relationship management, and operational limitations at Bangladesh Finance PLC

Abstract

Non-Banking Financial Institutions (NBFIs) play a pertinent role in the financial system of Bangladesh as they support long term financing, SME and retail development, and structured financial services. However, this sector has been facing significant challenges due to liquidity constraints, higher cost of funds, lower depositor confidence due to the situation, and operational inefficiencies. This particular report aims to thoroughly examine and analyse the financial performance of Bangladesh Finance PLC, with a detailed focus on relationship management (RM) effectiveness, and operational limitations. This study uses a mixed method approach (both qualitative and quantitative, primary and secondary data collection from the company and industry respectively) to analyse the financial trends over the past five years. The findings suggest that despite regulatory oversight and restructuring efforts, NBFIs are more disadvantaged in comparison to commercial banks. Some key concerns include higher funding costs, limited deposit bases due to competition from banks and more established financial institutions, and operational bottlenecks. Inefficient RM training structures and system inefficiencies further hinder deposit mobilisation which has been addressed and will be corrected. The report is concluded with strategic recommendations and planning which focus on RM capacity enhancement, more operational automation, the transition to a paperless system, restoration of trust and confidence, and more depositor focused product innovation addressing key client needs to enhance long term financial sustainability.