The Bangladesh Bank is finalising preparations to initiate the liquidation of six non-bank financial institutions (NBFIs) that have been crippled by systemic corruption, gross mismanagement, and persistent irregularities. Senior officials at the central bank have indicated that the process is slated to commence before the upcoming Eid holidays, contingent upon the timely release of a Tk5,600 crore stimulus package from the government’s Finance Division.
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Funding and Implementation Strategy
To facilitate an orderly wind-down, the central bank has formally requested the aforementioned funds to address the immediate liabilities of these “non-viable” entities. The Finance Division has reportedly agreed to disburse the capital in two tranches: an initial Tk2,600 crore followed by a final Tk3,000 crore by June.
Upon receipt of the first instalment, the regulator plans to appoint dedicated administrators whose primary mandate will be the restitution of individual depositors. Settling these retail claims is viewed as a prerequisite before the central bank approaches the judiciary for formal liquidation orders.
A Sector Divided: The Scale of Distrust
The NBFI sector in Bangladesh is currently experiencing a stark divergence in performance. Out of the 35 institutions operating in the country, the central bank has identified 20 as “troubled.” The financial health of these entities stands in grim contrast to the remaining 15 “sound” institutions.
Comparative Performance of the NBFI Sector:
| Metric | 20 Troubled NBFIs | 15 Healthy NBFIs |
| Total Loans | Tk25,808 crore | N/A |
| Defaulted Loans (NPLs) | Tk21,462 crore (83.16%) | 7.31% |
| Mortgaged Asset Value | Tk6,899 crore | N/A |
| Net Individual Deposits | ~Tk4,971 crore | N/A |
| Annual Profit/Loss | Significant Losses | Tk1,465 crore (Profit) |
The “Non-Viable” Six
The central bank’s scrutiny, based on capital adequacy, default rates, and the inability to honour depositor withdrawals, has highlighted six firms for immediate closure. The statistics for these institutions reveal a near-total collapse of their credit portfolios. For instance, FAS Finance reports a staggering 99.93% default rate, while International Leasing holds Tk3,975 crore in loans deemed almost entirely unrecoverable.
Financial Distress of the Liquidation Candidates:
FAS Finance: 99.93% default rate; Tk1,719 crore accumulated loss.
Fareast Finance: 98% default rate; Tk1,017 crore loss.
International Leasing: 96% default rate; Tk4,219 crore loss.
Peoples Leasing: 95% default rate; Tk4,628 crore loss.
Aviva Finance: 83% default rate; Tk3,803 crore loss.
Premier Leasing: 75% default rate; Tk941 crore loss.
A Final Reprieve for Three
While six face the axe, three other institutions—BIFC, GSP Finance, and Prime Finance & Investment Limited—have been granted a temporary stay of execution lasting between three and six months. These entities must demonstrate a significant recovery of defaulted loans and a capital infusion to avoid joining the liquidation list.
The central bank has sought to reassure the workforce of the affected firms, confirming that all employee benefits will be honoured in strict accordance with service regulations as the institutions are wound down.