Five Insolvent Financial Institutions Face Compulsory Liquidation

Bangladesh Bank has resolved to initiate compulsory liquidation procedures against five deeply troubled non-banking financial institutions (NBFIs). This definitive regulatory action was approved on Tuesday during a board of directors meeting held at the central bank’s headquarters, under the chairmanship of Governor Mostakur Rahman.

As an immediate first step, the central bank will dissolve the boards of directors of these five entities and install independent administrators to take control of their corporate operations and asset portfolios.

Resolution Framework and Retail Depositor Caps

The five non-banking financial institutions designated for winding-up procedures are:

• FAS Finance and Investment Limited

• International Leasing and Financial Services Limited (ILFSL)

• Fareast Finance & Investment Limited

• Peoples Leasing and Financial Services Limited (PLFSL)

• Aviva Finance Limited

Central bank data reveals that these five failing firms collectively hold retail deposits worth approximately 2,700 crore BDT, representing the savings of about 27,000 individual retail depositors. Once the boards are officially disbanded, the newly appointed administrators will evaluate the total remaining assets against liabilities to structure the liquidation payouts.

The regulatory authority has confirmed that individual retail depositors will be eligible to recover a maximum threshold of 10 lakh BDT from their principal deposits during the initial phase of asset distribution.

Industry experts note that years of unchecked financial irregularities, systemic governance failures, and major credit scams completely hollowed out these institutions. A significant factor in these collapses includes the massive financial fraud linked to P.K. Halder, who is accused of embezzling roughly 3,500 crore BDT directly from PLFSL, ILFSL, FAS Finance, and BIFC.

Performance Review and Grace Periods

The central bank board reviewed a total of nine vulnerable NBFIs during Tuesday’s session. While five were immediately pushed into liquidation, the remaining four were granted a strict three-month grace period to prove their financial viability.

This probationary group consists of Bangladesh Industrial Finance Company (BIFC), Premier Leasing & Finance Limited, GSP Finance Company, and Prime Finance & Investment Limited.

These four firms have exactly 90 days to demonstrate a clear capacity to reimburse the principal funds of their individual depositors. Should any of these companies fail to meet this specific target, they will be stripped of their licenses and transferred directly into the mandatory winding-up and resolution framework.

Non-Performing Loans and Regulatory Milestones

The escalating crisis prompted Bangladesh Bank to issue show-cause notices to twenty struggling NBFIs in May of last year, citing chronic liquidity shortages and widespread failure to process depositor withdrawals. A subsequent risk assessment narrowed the field to nine critical cases, setting the stage for the current enforcement actions.

The documented non-performing loan (NPL) ratios recorded at the end of December highlight the extreme financial distress of the five liquidated institutions: