Listed firms want central bank to reform credit blacklisting rules

Listed companies have called on Bangladesh Bank to overhaul its credit reporting rules, arguing that financially healthy firms should not be held back by the poor borrowing records of their directors or nominating institutions.

The Bangladesh Association of Publicly Listed Companies (BAPLC) has urged the central bank to implement a more pragmatic Credit Information Bureau (CIB) reporting framework to ensure that financially sound listed companies are not unfairly penalised for the adverse credit records of their nominating institutions or individual directors.

A high-level delegation of the association, led by its President Riad Mahmud, made the request during a meeting with Bangladesh Bank Governor Mostaqur Rahman held at the central bank headquarters in the capital today (16 June). 

The meeting focused on resolving critical regulatory bottlenecks that currently hinder the operational flexibility and growth of the country's premier corporate entities.

At the heart of the discussion was the impact of CIB reporting on companies where nominee directors serve. 

Under the current practice, if a nominating institution such as a parent company or a financial firm is flagged in the CIB for a default, it often creates significant hurdles for the company where its nominee sits on the board, even if that company is entirely compliant and profitable. The BAPLC delegation emphasised that such "proxy defaults" create undue difficulties in securing credit and maintaining business operations, and called for a fair framework where a company's creditworthiness is judged solely on its own financial health.

Furthermore, the association raised concerns over the systemic challenges faced by large business groups. Currently, the adverse CIB status of a single sponsor, director, or guarantor can effectively freeze the credit facilities of all other entities within the same group. 

The BAPLC also requested the Bangladesh Bank to move away from this blanket approach and instead adopt a "balanced and entity-specific" evaluation. They argued that otherwise healthy and compliant entities should not be deprived of financing due to the financial distress or defaults associated with an individual or a sister concern.

Beyond CIB-related issues, the BAPLC leaders advocated for an expansion of the government's newly announced Factory Revival Fund. While they appreciated the initiative to reopen shuttered units, they requested that the facility be extended to include restructured but financially distressed factories that remain operational. These units, according to the BAPLC, often suffer from severe working capital shortages. Providing them with support would sustain industrial operations, protect thousands of jobs, and prevent viable industries from sliding into total operational suspension.

The delegation also observed that the national economy needs to pivot toward the capital market for long-term financing to mitigate the rising risks of non-performing loans (NPLs) in the banking sector. They noted that a greater reliance on equity and debt securities for long-term funding would not only deepen the capital market but also help banks reduce asset-liability mismatches. By diversifying funding sources, the corporate sector could achieve more sustainable growth while lowering the pressure on the banking system.