Bangladesh Bank has formulated a scheme to refund money to individual depositors of four non-bank financial institutions (NBFIs) currently in the process of liquidation.
Initially, individual depositors will be refunded their principal amount up to Tk50 lakh.
Any amount beyond this threshold will be refunded after taking a specific haircut. This decision was made on Thursday (September 24) during a meeting of the central bank's board of directors, chaired by Bangladesh Bank Governor Md Mostaqur Rahman.
According to meeting sources, individual depositors of these four institutions will receive their full principal amount for deposits up to Tk50 lakh.
For those with deposits exceeding Tk50 lakh, the money will be returned after deducting a specified portion from their principal amount.
Under this arrangement, depositors with up to Tk1 crore will receive a maximum of Tk60 lakh.
Those with deposits between Tk1 crore and Tk1.5 crore will get Tk80 lakh.
Depositors holding between Tk1.5 crore and Tk2 crore will receive Tk1.05 crore.
Those with deposits over Tk2 crore will receive Tk1.25 crore.
The four financial institutions are Aviva Finance, Fareast Finance, FAS Finance, and International Leasing.
On August 9, Bangladesh Bank dissolved the board of directors of these four institutions and declared the positions of Managing Director (MD) vacant.
Consequently, the central bank appointed administrators to manage the four financial institutions.
To assist the administrators, two additional Bangladesh Bank officials have been assigned to each institution.
Reports indicate that the defaulted loans of these four collapsing institutions have reached between 93% and nearly 100%, triggering the liquidation initiative.
Total deposits across the four institutions stand at Tk12,483 crore—comprising Tk3,012 crore in International Leasing, Tk5,368 crore in Aviva Finance, Tk1,246 crore in FAS Finance, and Tk449 crore in Fareast Finance.
In May last year, Bangladesh Bank initiated steps to cancel the registration licenses of 20 NBFIs that failed to return customer deposits, issuing show-cause notices asking why their licenses should not be revoked.
Subsequently, nine institutions were selected for liquidation in the first phase due to unsatisfactory responses.
Ultimately, the decision was made to close five. Due to pending legal complications regarding People's Leasing, a final decision on its closure has not yet been taken.
The remaining four institutions have been given three months to turn around; failure to improve their condition within this timeframe will result in their closure as well.
The four institutions granted time to recover are Prime Finance and Investment Limited, GSP Finance Company (Bangladesh) Limited, Bangladesh Industrial Finance Company Limited (BIFC), and Premier Leasing & Finance Limited.