Nbfi in Bangladesh

Introduction

Corporate governance broadly refers to the mechanisms, processes and relations by which corporations are controlled and directed. Governance structures identify the distribution of rights and responsibilities among different participants in the corporation (such as the board of directors, managers, shareholders, creditors, auditors, regulators, and other stakeholders) and include the rules and procedures for making decisions in corporate affairs. Corporate governance includes the processes through which corporations' objectives are set and pursued in the context of the social, regulatory and market environment. Governance mechanisms include monitoring the actions, policies and decisions of corporations and their agents. Corporate governance practices are affected by attempts to align the interests of stakeholders.

Good corporate governance should provide proper incentives for the board and management to pursue objectives that are in the interests of the company and its shareholders and should facilitate effective monitoring. The presence of an effective corporate governance system, within an individual company or group and across an economy as a whole, helps to provide a degree of confidence that is necessary for the proper functioning of a market economy”.

Financial system is most important part of any economy. This financial system comprises banks and non bank financial institutions (NBFIs). Both banks and financial institutions are engaged in mobilizing fund from surplus unit to deficit unit of the economy. Financial institutions are engaged in financial intermediation, exchanging financial assets on own behalf and on customers behalf, assisting in creation of financial assets providing investment advice and managing portfolio of participants. As Bangladesh is an import based economy banks are dominant financial institution in Bangladesh. There are thirty listed banks. So, some of the projects chosen by NBFIs are treated as high risk...