Central Bank to Liquidate Six Ailing NBFIs

In a decisive move to sanitise a fractured financial sector, Bangladesh Bank has formalised plans to liquidate six non-bank financial institutions (NBFIs) crippled by systemic corruption, chronic mismanagement, and staggering capital shortfalls. The resolution, reached during a high-level board meeting on 27 January, marks a significant escalation in the regulator’s efforts to address the “distressed” segment of the nation’s lending landscape.

While six firms face immediate dissolution, the central bank has extended a three-month reprieve to three other struggling entities: Bangladesh Industrial Finance Company (BIFC), GSP Finance Company, and Prime Finance and Investment Limited. These firms have been granted a final window to mobilise fresh capital and recover a substantial portion of their defaulted loans. Should they fail to meet these stringent recovery benchmarks within the ninety-day grace period, they too will be ushered into the liquidation process.

A Sector Divided

The gulf between the healthy and the hollowed-out portions of the industry is stark. Of the 35 NBFIs operating in Bangladesh, the central bank has identified 20 as distressed. These 20 entities hold a combined loan portfolio of Tk25,808 crore, of which a staggering 83.16%—equivalent to Tk21,462 crore—is now classified as defaulted.

Alarmingly, the collateral held against these bad loans is valued at a mere Tk6,899 crore, leaving a massive deficit that threatens the stability of the broader financial ecosystem. In contrast, the 15 “sound” institutions boast a non-performing loan (NPL) ratio of just 7.31% and maintained a capital surplus of over Tk6,000 crore last year.

The Liquidation List: Financial Health Summary

The following table outlines the catastrophic financial positions of the firms slated for liquidation and those under observation:

Safeguarding Depositors and Staff

The 20 troubled institutions currently hold deposits totalling Tk22,127 crore, including nearly Tk5,000 crore from individual retail customers. Bangladesh Bank officials have indicated that an initial liquidity injection may be required to facilitate the restructuring and ensure that small-scale depositors are protected during the transition.

In a bid to maintain industrial peace, the regulator has explicitly assured that all employees of the liquidated firms will receive their full contractual benefits and severance packages in accordance with established service rules. Administrators are expected to be appointed shortly to oversee the winding-up of operations and the asset recovery process.