After years of uncertainty and mounting financial distress, individual depositors in Bangladesh’s non-bank financial institution (NBFI) sector are set to receive long-awaited relief. Bangladesh Bank has announced that the refund process for personal depositors of nine NBFIs identified for permanent closure or liquidation will begin shortly, backed by a direct financial commitment from the government.
According to estimates by the central bank, nearly Tk 50,000 crore will be required to repay depositors of these institutions. The government has formally pledged to provide this funding, enabling Bangladesh Bank to move ahead with the liquidation framework. On the strength of this assurance, the regulator has initiated formal procedures to wind up the affected institutions and protect depositors’ interests.
Under the plan, one administrator from Bangladesh Bank will be appointed to each of the nine NBFIs, supported by two additional officials. Once administrators assume charge, the institutions will be officially declared non-operational and all regular business activities will cease. The repayment of personal deposits will commence as soon as government funds are released. Because the state funding will be provided in two phases, depositors will also receive their money in two instalments.
The NBFIs slated for closure are People’s Leasing, International Leasing, Bangladesh Industrial Finance Company (BIFC), FAS Finance, Aviva Finance, Far East Finance, GSP Finance, Prime Finance and Premier Leasing. Several of these institutions—particularly People’s Leasing, International Leasing, BIFC and FAS Finance—collapsed amid allegations of large-scale financial manipulation linked to the high-profile PK Halder scandal. Aviva Finance, meanwhile, faced accusations of irregularities involving a major industrial conglomerate.
During the previous administration, weak governance, regulatory lapses and systemic corruption caused non-performing loans to balloon across the sector. In some of the affected institutions, more than 90 per cent of outstanding loans turned non-performing. As a result, thousands of ordinary depositors were unable to access their savings for years, leading to widespread hardship and erosion of confidence in the financial system.
At a recent press briefing, the Governor of Bangladesh Bank stated that the government, in coordination with the central bank, is committed to ensuring full repayment of individual depositors. Asset valuation is expected to be completed before Ramadan, with the first tranche of payments targeted shortly thereafter.
Deposit Position of Nine NBFIs (Tk crore)
| Category | Amount |
|---|---|
| Total deposits (personal & institutional) | 15,370 |
| Personal deposits | 3,525 |
| Institutional deposits | 11,845 |
| Personal deposits in People’s Leasing | 1,405 |
| Personal deposits in Aviva Finance | 809 |
| Personal deposits in International Leasing | 645 |
| Personal deposits in Prime Finance | 328 |
Once personal deposit repayments are completed, the appointed administrators will effectively act as liquidators. By selling movable and immovable assets, they will gradually settle the claims of institutional depositors. The entire liquidation process will ultimately be concluded through formal court proceedings.
It is noteworthy that Bangladesh Bank had initially considered shutting down 20 NBFIs. However, 11 institutions were granted additional time after submitting restructuring plans. Despite this, the sector remains under severe stress. As of the end of June last year, non-performing loans in the NBFI sector stood at approximately Tk 275,000 crore, accounting for nearly 36 per cent of total disbursed loans.
Analysts believe the PK Halder scandal dealt a severe blow to public trust in NBFIs. Nevertheless, prioritising individual depositors in the refund process is widely viewed as a crucial step towards restoring confidence and stabilising Bangladesh’s broader financial system.