The Bangladesh Bank has directed non-bank financial institutions (NBFIs) to complete legal procedures in order to replace their company suffix “Limited” with “PLC”. The central bank gave the direction in a notice on Wednesday.

The amendment to the Company Act 1994, which was made in 2020, requires all companies in Bangladesh to use the PLC suffix. The PLC abbreviation stands for “Public Limited Company” and indicates that the company is publicly traded.

In order to comply with the amendment, NBFIs will need to change their Memorandum of Association and Articles of Association. They will also need to file an application with the Registrar of Joint Stock Companies and Firms.

The deadline for NBFIs to complete the legal procedures is December 31, 2023.

There are currently 35 NBFIs operating in Bangladesh. The first NBFI was established in 1981. Of the 35 NBFIs, two are fully government-owned, one is a subsidiary of a state-run commercial bank, 19 were initiated by private domestic initiative, and 13 were initiated by joint venture initiative.

Major sources of funds for NBFIs are term deposits (at least three months tenure), credit facilities from banks and other NBFIs, call money as well as bond and securitisation.

NBFIs can conduct their businesses with diversified financing modes such as syndicated financing, bridge financing, lease financing, securitisation instruments, and private placement of equity.

They are not allowed to issue cheques, pay orders or demand drafts, receive demand deposits, and be involved in foreign exchange financing.

In February, the central bank gave permission to banks to complete legal procedures to add PLC as a suffix.

The move to require NBFIs to use the PLC suffix is part of the central bank’s efforts to improve corporate governance in Bangladesh. The central bank believes that the PLC suffix will make it easier for investors to identify and assess NBFIs.

The central bank has also said that the PLC suffix will help to improve the transparency and accountability of NBFIs.