At least half a dozen leasing companies are unable to float their planned initial public offerings (IPOs) within the timeframe set by the central bank due to some procedural bottlenecks.
"We have noticed that despite their willingness, some six to seven leasing companies are set to miss the official deadline for floatation of IPOs because of procedural complexities," a senior Bangladesh Bank (BB) official said.
The companies concerned find themselves in a difficult situation to accomplish some prior formalities like compliance of credit rating, auditing and getting approval from the Securities and Exchange Commission (SEC) for the IPO floatation, said the official.
Under the exiting rules, leasing companies are required to comply with the existing 'credit rating' provisions accordingly before inviting IPOs.
Considering the prevailing situation, the central bank has decided to relax the existing provisions for the particular non-banking financial institutions (NBFIs), he said without going into further details.
"The central bank authority has decided in principle to neither impose any financial penalty nor take any other action against those companies," said another BB official.
Besides, the regulator is considering sanctioning some time more for the NBFIs to help them complete the IPO floatation formalities, officials said.
They further said some of the leasing companies have already made appeals to the central bank for extension of the existing deadline.
Earlier, the BB issued a directive, under which some 15 leasing companies were to float IPOs by December 2005.
Out of them, at least four NBFIs have been able to float their IPOs while the similar number of companies is expected to float the same shortly, officials mentioned.
"We are convinced that despite making some delay in the flotation of IPOs by a few companies, all the concerned leasing companies are now more enthusiastic about the IPO floatation than in the previous time," said an official.
Meanwhile, the central bank under the article 18 (chha) of existing Financial Institutions Act 1993 has has made IPO floatation mandatory for the NBFIs concerned, aiming to boost the country's capital market.
Another important objective of the initiative is to make leasing companies operationally sound through raising their capital base.