When BB can cancel liscense of Financials Institutions?

License for Financial Institution

No person or entity  shall enter into financial business unless he holds a valid license for Financial Institution for this purpose.

 Before granting a license, Bangladesh Bank shall be satisfied regarding following important issues: 

  • Financial Position of the entity
  • Management
  • Capital Adequacy and earning probability
  • Objectives of Memorandum of Association
  • Public interest
  • Any other matter as decided by Bangladesh Bank

 There is a requisite of minimum paid up capital also. Minimum Capital will be determined by Bangladesh Bank. As per Circular of BB Minimum Paid up capital of a financial institution shall be 50 crores with in December 31, 2010. Bangladesh Bank may cancel any license if it fails to satisfy the requirement of minimum paid up capital in time. BB also imposed Prohibition of opening of Branch office of NBFIs. As per BB, no branch cannot be opened and place of  the same cannot be changed without approval of Bangladesh Bank.

 When BB can cancel liscense of Financials Institutions?  

Following are the grounds for which Bangladesh Bank can cancel license of a Financials Institutions:

a)     If the Financials Institutions is not run according to the objective of the Financials Institutions or;

b)     Dissolution of Financials Institutions or suspension of Business or;

c)      Submission of false statement/ information for license or;

d)     Running of any business which is detrimental to the interest of the depositors

e)     If the assets are insufficient to settle the amount of depositors

f)        Fails to comply with the minimum capital

g)     Contravenes any condition of license

The Financials Institutions will be notified for a maximum 15 days for giving an opportunity of being heard for cancellation of license.

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