Understanding Non-Banking Financial Institutions and Customer Accounts: Report Summary

Table of Contents
1. Introduction Page no
1.1 Background of the Report------------------------------------------------ 05
1.2 Objectives of the Report-------------------------------------------------- 05
1.3 Methodology of the Report ---------------------------------------------- 05
1.4 Limitations ----------------------------------------------------------------- 05
2. Non-Banking Financial Institutions------------------------------------- 06
2.1 Financial Institutions Act (1993) --------------------------------------- 06
2.2 What finance companies can do? -------------------------------------- 06
2.3 What finance companies cannot do? ----------------------------------- 07
2.4 Importance of finance companies -------------------------------------- 08
2.5 Problems and prospects of NBFIs-------------------------------------- 08
2.6 Steps necessary to improve NBFIs------------------------------------- 09
3.Accounts of customers -------------------------------------------------------- 11
3.1 Importance of Opening an account------------------------------------- 11
3.2 Types of bank account--------------------------------------------------- 11
3.3 Precaution for opening a current account------------------------------ 13
3.4 KYC------------------------------------------------------------------------ 14
3.5 The importance of KYC in banks and financial institutions-------- 14
3.6 The three components of KYC include-------------------------------- 15
3.7 Customer identification profile ----------------------------------------- 15
3.8 Minor ----------------------------------------------------------------------- 16
3.9 Married Woman----------------------------------------------------------- 16
3.10. Pardanashin Women---------------------------------------------------- 17
3.11. Illiterate Person --------------------------------------------------------- 17
3.12 Persons of Unsound Mind---------------------------------------------- 17

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3.13 Joint account------------------------------------------------------------- 18
3.14 Joint Stock Company--------------------------------------------------- 19
3.15 Partnership Account ---------------------------------------------------- 20
3.16 Trust ---------------------------------------------------------------------- 20
5. References ------------------------------------------------------------------------ 21

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Introduction
Background of the Report:
Objectives of the Report:
The main objectives of this report are,
o Understand NBFIs function and modes of financing
o Discuss NBFIs problems and prospects
o Discuss steps that is necessary to improve NBFIs
o Discuss precautions for opening current account
o Discuss opening current account for minor, married/pardanashin women, illiterate
persons, persons of unsounded mind and organizations.
Methodology of the Report:
This report was prepared with the help of information related to the concept of the report
from internet, our textbook and information shared by our honorable course teacher during
lecture sessions of this course.
Limitations:
The major limitation that this report faced is time limitation. Due to such short time frame,
this report couldn’t discuss every aspect of Non-Banking Financial Institutions (NBFIs) and
Account of customer. Despite that we tried our best for successful completion of this report.
Non-Banking Financial Institutions (NBFIs)
The non-bank financial institutions (NBFIs) comprise a rapidly growing segment of the
financial system in Bangladesh. Financial institutions that provide banking services without
meeting the legal definition of a bank are called a Non-Banking Financial Institution
(NBFIs). These institutions typically are restricted from taking deposits from the public
depending on the jurisdiction. Nonetheless, operations of these institutions are often still
covered under countries banking regulations. Investment banks, mortgage lenders, money
market funds, insurance companies, hedge funds, private equity funds, and P2P lenders are
all examples of NBFIs.

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The NBFIs have been contributing toward increasing both the quality and quantity of
financial services and thus mitigating the lapses of existing financial intermediation to meet
the growing needs of different types of investment in the country. At present, 29 NBFIs are
operating their business across the country of which one is government owned, 15 are
privately owned local companies, and the remaining 13 are established under joint venture
with foreign participation. Non-banking financial institutions (NBFIs) plays very significant
role in economic and infrastructure development of Bangladesh.
Financial Institutions Act (1993)
A regular enactment for setting up and regulating the activities of the finance companies was
made through the Financial Institutions Act 1993. The act defines the functions a finance
company can undertake. Under this act:
What the finance companies can do?
1) grant of loans or advances for financing industry, commerce, agriculture or housing.
2) underwriting and investment in shares, stock, bonds, debentures or debenture stock or
securities issued by the government or any local authority.
3) hire purchase transactions including leasing of machinery or equipment.
4) provide finance for venture capital. And,
5) undertake the business of a merchant Bank, investment company, mutual association,
and mutual company, leasing company or building society.
What do finance companies cannot do?
1) accept any deposit which can be withdrawn by cheque, draft or order drawn by the
depositor.
2) deal in gold or foreign exchange.
3) grant unsecured advances unsecured loans or unsecured credit facilities which in the
aggregate and outstanding at any one time exceed 10% of the paid-up share capital
and reserves of the financial institution to any farm in which any of its directors has
any interest.
4) give any loans or advances against the security of its own share.