BB gives nod to liquidate 5 NBFIs
The Bangladesh Bank board of directors has given preliminary approval to close or liquidate five non-bank financial institutions (NBFIs) in the country.
The liquidation process of these institutions may start from next July, according to relevant sources.
The decision was taken at a meeting of the Bangladesh Bank board of directors on Tuesday. The meeting was presided over by governor Md Mostakur Rahman.
The institutions that are on the list of closure or liquidation are FAS Finance, Fareast Finance, Aviva Finance, People’s Leasing, and International Leasing.
According to Bangladesh Bank data, the default loan rate of these institutions has reached almost 100 per cent from 93 per cent.
The five institutions slated for liquidation are FAS Finance, Fareast Finance, Aviva Finance, People’s Leasing and Financial Services, and International Leasing and Financial Services.
The central bank plans to shut down these entities under the Bank Resolution Act 2026. As part of the process, it will appoint one of its directors as an administrator for each institution, assisted by two additional officials. These institutions will eventually be declared defunct.
Central bank officials estimate that approximately Tk 5,000 crore will be required to return funds to individual depositors. The central bank reportedly moved forward with the liquidation decision after receiving positive assurances from the government regarding fund allocation in the upcoming national budget.
The Bank Resolution Act provides a framework for the merger, restructuring, or closure of financially distressed institutions and dictates how assets should be liquidated to pay off creditors.
The decision follows a lengthy review process. In May last year, the central bank issued show-cause notices to 20 NBFIs for high NPLs and failure to return deposits. Later, nine institutions with unsatisfactory recovery plans were earmarked for closure. That list was trimmed to six in January and finally to five, with Premier Leasing being excluded from the current final list.
The financial health of these entities, as of December last, paints a dire picture with FAS Finance having 99.99 per cent NPL ratio, International Leasing 99.44 per cent, Fareast Finance 98.50 per cent, People’s Leasing 95 per cent and Aviva Finance 93.93 per cent NPL ratio.
Industry insiders attribute this collapse to years of systemic irregularities, corruption, and massive loan scams. Notably, disgraced businessman PK Halder is accused of embezzling at least Tk 3, 500from four institutions: People’s Leasing, International Leasing, FAS Finance, and BIFC.
