Bangladesh Bank has moved closer to shutting down five non-bank financial institutions (NBFIs) that have been struggling for years with severe loan defaults and mounting pressure from depositors seeking to withdraw their savings.
The central bank’s Board of Directors has given initial approval for the liquidation process, which is expected to begin in July following a meeting chaired by Governor Md Mostaqur Rahman on Wednesday. Officials said the decision reflects growing concerns over the financial instability of several institutions in the sector.
The five firms identified for liquidation are FAS Finance, Fareast Finance, Aviva Finance, People’s Leasing and Financial Services, and International Leasing and Financial Services.
According to Bangladesh Bank data, these institutions are in an extremely fragile condition, with non-performing loan (NPL) ratios ranging from 93 per cent to almost 100 per cent. Their inability to recover loans over an extended period has left them unable to meet withdrawal demands from depositors.
Under the planned process, the institutions will be wound up in line with the Bank Resolution Act 2026. Bangladesh Bank will appoint administrators from its own officials, supported by additional staff, to oversee asset recovery and settlement procedures before the entities are formally declared defunct.
Central bank sources estimate that around Tk5,000 crore will be required to repay individual depositors. The decision to proceed with liquidation follows assurances that the government may allocate necessary funds in the upcoming national budget.
Earlier reviews of the sector saw Bangladesh Bank issue show-cause notices to 20 NBFIs, later narrowing the list as recovery plans failed. Eventually, five institutions were selected for closure, while Premier Leasing was dropped from the final list.
Industry insiders have blamed years of poor governance, irregular lending practices, and large-scale financial fraud for the collapse. Among the most cited cases is alleged embezzlement by businessman PK Halder, who is accused of siphoning off around Tk3,500 crore from multiple institutions.
