Impact of PK Halder’s irregularities: Financial institutions in loss for over half a decade

Bangladesh’s non-bank financial institutions (NBFIs) continue to reel from the legacy of Prashanta Kumar (PK) Halder’s financial manoeuvring, which has left the sector mired in sustained crisis.

For six consecutive years, the industry has been posting losses, with aggregate deficits reaching Tk 35.55 billion (3,555 crore) at the close of 2024—almost double the Tk 18.03 billion (1,803 crore) loss recorded in 2023.

The decline of the NBFI sector can be traced back to 2014, when PK Halder, then managing director (MD) of one institution, exercised covert control over four others under various guises. Through these, he channelled out a huge amount of money under the pretext of loans, a pattern of malpractice that mirrored the scandals of the S Alam, with whom he was closely aligned.

The collapse of several of these institutions has now dragged down the sector as a whole.

According to Bangladesh Bank, there are currently 35 NBFIs in operation—22 domestically owned and 13 joint ventures with foreign partners. Of those, 20 were served notices to explain why they should not be shut down owing to unmanageable defaulted loans and chronic liquidity shortfalls. Eleven of them have submitted turnaround plans, while nine face closure, with both the central bank and the government endorsing the move.

The central bank has also taken steps to set up a depositors’ protection fund to compensate savers of the failed firms.

While the sector at large suffers, some institutions continue to thrive. Those include IDLC Finance, IPDC Finance, LankaBangla Finance, DBH Finance, EDCL, United Finance and National Housing. Their profitability offsets part of the wider decline, though the sector’s consolidated losses now exceed Tk 35 billion.

The central bank has issued closure notices to 20 institutions, including CVC Finance, Bay Leasing, Islamic Finance, Meridian Finance, GSP Finance, Hajj Finance, National Finance, IIDFC, Premier Leasing, Prime Finance, Uttara Finance, Aviva Finance, Phoenix Finance, Peoples Leasing, First Finance, Union Capital, International Leasing, BIFC, Fareast Finance and FAS Finance.

Of these, nine—including FAS Finance, BIFC, Peoples Leasing, International Leasing, Aviva Finance, Premier Leasing, Fareast Finance, GSP Finance and Prime Finance—are separated for liquidation.

The volume of defaulted loans across NBFIs has risen steeply, from 7.9 per cent of total lending in 2018 to 15 per cent in 2020, and a staggering 33.83 per cent by the end of 2024.

In other words, one in three loans is now defaulted. The sector last posted an overall profit in 2018, totalling Tk 8.3 billion (830 crore). Since then, losses have mounted relentlessly—Tk 22.2 billion (2,220 crore) in 2019, rising to Tk 35.55 billion in 2024.

Annual financial statements of each organisation for 2024 reveal International Leasing alone lost Tk 8.63 billion (863 crore), BD Finance Tk 7.83 billion (783 crore), Bay Leasing Tk 4.38 billion (438 crore), IIDFC Tk 1.58 billion (158 crore) and Hajj Finance Tk 1.32 billion (132 crore).

Smaller institutions such as CVC, Midas, Meridian and National Finance each reported losses ranging between Tk 300-700 million (30–70 crore).

Despite the broader collapse, certain firms have remained profitable, earning recognition both domestically and internationally for their governance and resilience.

IDLC Finance posted Tk 2 billion (200 crore) in profits last year, retaining its position as the leader in SME (small and medium enterprise) and sustainable financing for five consecutive years. It has expanded outreach by partnering with bKash for deposit mobilisation, bringing in 1.5 million account holders in addition to its direct customer base.

IPDC Finance and United Finance also reported profits of Tk 360 million (36 crore) and Tk 21 210 million (21 crore) respectively, while DBH Finance made Tk 1.01 billion (101 crore), underpinned by robust housing finance operations.

Infrastructure Development Company Limited (IDCOL), with its investments in public–private partnerships, renewable energy and energy efficiency projects, posted Tk 1.71 billion (171 crore) in profits.

Documents of the financial organisations reveal that, before and after the 2014 general elections, ownership of at least four NBFIs underwent abrupt and opaque changes, paving the way for PK Halder’s takeover.

Through shell companies and large stock acquisitions, he gained control of International Leasing, Peoples Leasing, FAS Finance and BIFC.

Once in control, he siphoned funds under fictitious loan agreements, even diverting capital abroad to set up companies.

The four organisations are in dire straits now as none could return money to the depositors.

Halder also held MD positions at Reliance Finance (now Aviva) and NRB Global Bank (now Global Islami Bank), from which he misappropriated further sums.

According to industry insiders, elements within Bangladesh Bank and the Securities and Exchange Commission (BSEC) tacitly facilitated the plunder by turning a blind eye.

By mid-2019, as his captured institutions began defaulting on depositor repayments, PK Halder fled to India, where he was subsequently arrested. After serving a jail term, he is reported to have relocated to a third country.

Mominul Islam, former chairman of the Bangladesh Leasing and Finance Companies Association, told Prothom Alo that long-standing regulatory neglect was central to the sector’s decay.

“Timely corrective measures were not taken, leaving most institutions in ruins. Consolidation and capital infusion are now essential to restore confidence. With the right policies, this sector can play a vital role in housing finance and long-term investment, with bonds as a potential funding source. For this law has to be amended,” he said.

“The reputation of sound institutions is being tarnished as questions have been raised about the whole sector. In India, NBFIs play a central role in economic development. Bangladesh must urgently take bold decisions to ensure its own institutions can perform a similar role,” Mominul Islam added.