Bangladesh Bank is set to take steps to return funds trapped in five non-bank financial institutions (NBFIs) that have failed to repay depositors.
The government will provide the required funds from public revenue to facilitate these repayments. Before that, the five institutions will be closed or liquidated.
To this end, Bangladesh Bank has decided to appoint administrators to oversee the institutions.
According to sources at Bangladesh Bank, once the administrators take charge, efforts will begin to repay small depositors.
The central bank has already secured the government's approval for the repayment plan. Following this approval, it has finalised the decision to appoint administrators.
Sources at Bangladesh Bank said that the five financial institutions earmarked for liquidation or closure are FAS Finance, Fareast Finance, Aviva Finance, Peoples Leasing and Financial Services, and International Leasing and Financial Services.
Approximately 27,000 depositors have around Tk 27 billion (2,700 crore) deposited in these institutions.
Under Bangladesh Bank’s plan, individual depositors will initially receive refunds of up to Tk 1 million (10 lakh) each after the administrators assume control.
According to a Bangladesh Bank report, by the end of December, the non-performing loan ratio at FAS Finance had reached 99.99 per cent, compared with 98.50 per cent at Fareast Finance, 93.93 per cent at Aviva Finance, nearly 95 per cent at Peoples Leasing, and 99.44 per cent at International Leasing.
In other words, almost all loans issued by these institutions have become non-performing.
Among the five institutions, Aviva Finance was chaired by the controversial Chattogram-based businessman Saiful Alam (S Alam). The other four institutions were controlled by Prashanta Kumar Halder (PK), a figure widely criticised for his role in major financial-sector scandals.
During their tenures, funds were allegedly withdrawn from these institutions through various entities and proxy arrangements. As a result, depositors have been unable to recover their money for many years.
During the tenure of the recently departed interim government, authorities had taken steps to either revive or liquidate these institutions in order to alleviate the hardship faced by depositors.
However, they were ultimately unable to complete the process before leaving office. The current government has therefore continued the initiative begun by the interim administration.
To support this effort, the proposed national budget for the 2026–27 fiscal year includes an allocation for this sector.
A Bangladesh Bank official, speaking on condition of anonymity, said that after the appointment of administrators, the authorities would initially refund deposits of up to Tk 1 million (10 lakh) to individual depositors.
They would then decide on the claims of other depositors. The official added that there was no justification for continuing to incur expenses by keeping these institutions operational.
For that reason, the authorities are moving to initiate liquidation proceedings as quickly as possible.
According to Bangladesh Bank sources, the authorities will first dissolve the boards of directors of the institutions. They will then consolidate the institutions and appoint administrators, similar to the process followed for banks.
Bangladesh Bank is currently overseeing a process to merge five Shariah-based banks into a new entity named Sammilito Islamic Bank.
In May last year, Bangladesh Bank issued notices to 20 Non-Bank Financial Institutions (NBFIs), asking them to explain why the central bank should not shut them down because of their high levels of non-performing loans and their failure to repay depositors.
The authorities subsequently moved to close or liquidate nine of those institutions after finding their recovery and turnaround plans unsatisfactory.
However, in January this year, Bangladesh Bank revised the list and decided to close or liquidate six institutions instead, removing GSP Finance, Prime Finance and BIFC from consideration.
More recently, the central bank’s board of directors reached a preliminary decision to close or liquidate five institutions, excluding Premier Leasing from the list.
A leader of the ruling party informed the central bank that he would take the initiative to revive Premier Leasing. As a result, the authorities have, for the time being, excluded the institution from the liquidation list.
Bangladesh Bank Governor Mohammad Mostaqur Rahman said at a post-budget press conference on 12 June, “The issue of refunding money held by financial institutions has persisted for 12 years. Depositors of these institutions will receive their money back within the next one to two weeks.”