The Bangladesh Securities and Exchange Commission (BSEC) is going to reorganise the boards of several non-bank financial institutions (NBFIs) this month in a bid to improve their financial health.

The stock market regulator will sit with Bangladesh Bank soon to discuss about the appointment of directors in these NBFIs.

"We want to restructure the boards of some NBFIs which have been struggling to make a profit for several years," said BSEC Chairman Prof Shibli Rubayat-Ul-Islam.

Earlier the BSEC restructured the boards of some companies and NBFIs and got good results, he said, adding that it had led to an oil producer and a textile manufacturer to resume production.

Defaulted loans of the NBFIs surged by Tk 1,216 crore to Tk 14,232 crore in January-March of 2022 compared to that in the preceding quarter

The regulator previously restructured the boards of C&A Textiles, Ring Shine Textiles, United Airways, Familytex (BD), Emerald Oil Industries, Fareast Finance and Investment, Fareast Islami Life Insurance Company, FAS Finance and Investment, Bangladesh Welding Electrodes, and Alhaj Textile Mills.

Of them, Ring Shine Textiles and Emerald Oil Industries resumed operations while C&A Textiles appears to be making a comeback.

"Though some of the companies are going through a real bad patch, now we can know about the situation of the companies with the reforms of the boards," the BSEC chairman told journalists recently.

"We want to see an improvement of the health of the listed NBFIs, so we will be restructuring their boards," he added.

A top BSEC official, preferring anonymity, said seven to eight NBFIs were suffering because of a huge amount of non-performing loans, which was causing those to struggle in making a profit.

The default loans of the NBFIs surged by Tk 1,216 crore to Tk 14,232 crore in the January-March quarter of 2022 compared to that in the preceding quarter, showed Bangladesh Bank data.

Year-on-year, it was a rise of 37.45 per cent.

At the end of March, the bad loans amounted to 20.63 per cent of the total credit disbursed by the institutions.

Due to the bad health of the NBFIs, the banking sector was being affected along with stock investors, he added.

Some 25 banks are suffering from a collective default loan of around Tk 975 crore after several of the NBFIs failed to pay back funds.

The BSEC wants to restructure their boards to improve the situation, he said, adding that all the companies would not have the same number of directors. "Depending on the situation, we will appoint directors," the BSEC official added.

Among the 23 listed NBFIs, Bangladesh Industrial Finance Company, Fareast Finance and Investment, First Finance, and People's Leasing and Financial Services remain in the Z category for their failure to provide any dividend year after year, according to Dhaka Stock Exchange (DSE).

At the DSE, stocks of seven companies, including four junk ones of NBFIs, were traded below their face values and two traded near to that, mainly due to their subpar performance and huge amount of NPLs.