A polarizing crisis has erupted within Bangladesh’s retail financial landscape following an administrative proposal by Bangladesh Bank to manage the liquidation and winding-up of five critically insolvent non-bank financial institutions (NBFIs).
At the center of the dispute is a policy option being considered by the central bank that would place a standard compensation cap of Tk10 lakh per individual depositor, regardless of their total legitimate balance.
The proposal has drawn sharp criticism from retail savers and macroeconomists.
Critics argue that forcing private citizens to absorb substantial capital losses because of institutional corruption, systemic looting, and regulatory oversights by the state represents an unfair shift of liability onto the victims of financial fraud.
The primary argument raised by affected depositors focuses on the formal regulatory status of the collapsing entities.
Savers emphasize that their capital was not placed with unauthorized or shadow-banking operations, but was deposited within state-licensed corporate institutions operating under the continuous direct oversight of Bangladesh Bank.
[The NBFI Depositor Asset Exposure]
Legitimate Account Balance: Tk50 Lakh (Verified Personal Savings)
Proposed Liquidation Cap: Tk10 Lakh (Maximum Statutory Payout)
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[Tk40 Lakh Forced Capital Write-Off]
Retail savers face an 80% cut due to institutional insolvency
Consider a retired professional or family that deposited Tk50 lakh in lifetime savings within a central-bank-approved institution to cover long-term healthcare or educational costs.
Under the proposed Tk 10 lakh liquidation ceiling, this depositor faces a Tk40 lakh forced write-off—representing an 80% loss on their principal.
Legal and economic experts note that because these financial firms operated within the state's official framework, the central bank bears a structural responsibility to protect depositors rather than forcing conservative savers to absorb the costs of institutional insolvency.
Systemic frauds
The financial distress across the NBFI sector is not the result of standard market fluctuations or macroeconomic cycles.
Instead, extensive investigations by the Anti-Corruption Commission (ACC), judicial oversight panels, and forensic accountants have uncovered systemic asset misappropriation and insider lending fraud.
A prominent example is the multibillion-taka embezzlement network linked to PK Halder, which systematically drained cash reserves from multiple financial firms.
Testimony presented in corporate court procedures has highlighted how these asset-stripping operations occurred alongside insider collusion.
Rashedul Haque, former managing director of International Leasing, stated in formal court depositions that senior regulatory executives—including then-deputy governor SK Sur Chowdhury and executive director Shah Alam—provided administrative cover for these operations.
The ACC has since filed formal corruption charges against these former central bank officials, reinforcing depositors' arguments that institutional failures within the regulatory body itself directly enabled the losses.
According to operational logs compiled by Bangladesh Bank, the five non-bank financial institutions scheduled for structural winding-up hold combined retail deposits totaling Tk2,700 crore, distributed across approximately 27,000 individual filers.
Distressed NBFI assets & NPL ratios | ||
NBFI | Active Depositors Base | NPL Rate |
FAS Finance | 27,000 Individuals | 94% to 100% |
FarEast Finance | Total: Tk2,700C | Complete breakdown of underlying loan portfolios and structural cash reserves |
Aviva Finance | ||
Peoples Leasing | ||
International Leasing | ||
As non-performing loan (NPL) ratios across these five institutions range from 94% to nearly 100%, their internal cash reserves have effectively vanished.
The central bank's current strategy involves dissolving the existing boards of directors, appointing state administrators to audit remaining assets and liabilities, and establishing an orderly liquidation pipeline.
However, the proposed Tk10 lakh payout cap remains a major source of concern for the affected depositors.
In response to growing public concern, Bangladesh Bank clarified that a final policy directive regarding the repayment structure has not yet been enacted.
Central Bank spokesperson and executive director Arif Hossain Khan confirmed that the proposed Tk10 lakh limit is one of several administrative options under review.
The central bank's oversight board is currently evaluating alternative liquidation frameworks, including phased multi-year repayment schedules and targeted asset recovery strategies.
A final decision on the repayment mechanism is expected in the coming weeks.
BB Liquidation Resolution Pathways
Option A: Enforce a flat Tk 10 Lakh cap ──▶ Risk: Sharp decline in public confidence
Option B: Implement phased repayments ──▶ Goal: Gradual asset recovery and liquidations
Option C: Execute comprehensive asset foreclosures ──▶ Goal: Full principal restoration
