In a major regulatory intervention, Bangladesh Bank has finalized a restructuring blueprint to liquidate five insolvent Non-Bank Financial Institutions (NBFIs) that have frozen depositors' funds for over a decade.
The central bank plans to dissolve the boards of these institutions, appoint statutory administrators, and initiate a phased asset liquidation process.
Under the first phase of this state-backed bailout framework, individual retail depositors will be eligible to recover up to Tk10 lakh of their frozen principal.
The capital required for this initial payout will be sourced directly from a dedicated government fund allocated in the national budget.
The final regulatory framework targets five chronically distressed NBFIs for statutory winding-up proceedings: FAS Finance, FarEast Finance, Aviva Finance, People's Leasing & Financial Services, and International Leasing & Financial Services.
According to central bank audits, these five entities collectively hold approximately Tk2,700 crore in total deposits across roughly 27,000 individual retail accounts.
The financial erosion within these institutions is reflected in their non-performing loan (NPL) ratios as of late last year:
[Non-Performing Loan (NPL) Ratios of Target NBFIs]
FAS Finance ───────────────────────────────────────────────▶ 99.99%
International Leasing ─────────────────────────────────────▶ 99.44%
FarEast Finance ───────────────────────────────────────────▶ 98.50%
People's Leasing ──────────────────────────────────────────▶ 95.00%
Aviva Finance ─────────────────────────────────────────────▶ 93.93%
This systemic collapse is primarily attributed to large-scale insider lending, asset diversion, and corporate governance failures.
Aviva Finance was previously controlled by the Chittagong-based S. Alam Group, while the remaining four entities fell under the control of Proshanta Kumar (P.K.) Halder, a key figure in recent domestic financial sector scams.
Under their management, major loan portfolios were diverted into non-performing shell companies, leaving the NBFIs without liquidity to service depositor maturities.
Phased reimbursement mechanism
To manage liquidity constraints and prioritize small savers, Bangladesh Bank has designed a tiered repayment schedule.
The operation will proceed along two distinct paths based on individual account sizes:
While retail depositors with balances under Tk10 lakh will have their accounts cleared, larger individual depositors can also opt to receive an initial Tk10 lakh advance.
Recoveries beyond this Tk10 lakh threshold, as well as institutional corporate deposits, will be deferred.
Their final settlement will depend on subsequent financial evaluations by appointed administrators, who will oversee the clawback of outstanding corporate receivables, the forensic auctioning of corporate real estate, and available fiscal allocations.
The central bank's final liquidation list is more focused than its initial scope. Last year, Bangladesh Bank issued show-cause notices to 20 underperforming NBFIs with elevated default profiles.
Following a structural review of their recovery plans, the regulator initially earmarked six institutions for closure.
However, GSP Finance, Prime Finance, BIFC, and Premier Leasing were subsequently removed from the immediate winding-up schedule after submitting revised capitalization strategies, narrowing the final enforcement action to these five institutions.
Financial sector analysts view this intervention as a key step toward rebuilding public confidence in the broader non-bank financial sector.
However, macroeconomists emphasize that using public tax revenues to settle depositor losses requires strict accountability.
They note that the bailout must be paired with aggressive legal efforts to freeze, confiscate, and liquidate the personal assets of the directors and executives responsible for the institutional failures.
Bangladesh Bank Governor M Mostakur Rahman stated that the liquidity issues facing these institutions have persisted for 12 years.
He noted that the central bank expects to demonstrate visible progress in releasing the first tranche of funds to affected depositors within the next one to two weeks.