Amid financial sector reformsBB moves to liquidate nine NBFIs

Bangladesh Bank is set to initiate the liquidation of nine non-bank financial institutions (NBFIs) following the consolidation of five troubled Shariah banks into a single entity, marking a major step in the central bank’s efforts to reform the country’s financial sector.

Governor Ahsan H Mansur told reporters on Monday that the institutions will be declared ‘non-viable’ within the week, after which a forensic audit will determine their actual financial position and net asset value (NAV).

“The extent of the institutions’ negative asset position cannot be confirmed until the audit is complete,” Mansur said, adding that further measures will be taken once the reports are received.

The central bank is also preparing to reduce shareholders’ stakes in the nine NBFIs to zero, following their failure to return depositors’ funds.

The nine institutions facing potential license cancellations are People’s Leasing, International Leasing, Bangladesh Industrial Finance Company (BIFC), FAS Finance, Aviva Finance, Far East Finance, GSP Finance, Prime Finance and Premier Leasing.

Mansur said the decision reflects long-standing irregularities and weak liability management, emphasising that protecting depositors and restoring sectoral discipline are the central objectives.

A substantial portion of the crisis in these institutions stems from past corruption, particularly under the previous administration.

Four of the companies were reportedly linked to financier Prashant Kumar (PK) Halder, while another is associated with the S. Alam Group.

The total deposits trapped in the nine institutions amount to Tk 15,370 crore, with Tk 3,525 crore held by small depositors and Tk 11,845 crore by institutional and corporate clients.

To safeguard small depositors, Bangladesh Bank has requested Tk 5,000 crore from the government for claim settlements. People’s Leasing accounts for the largest volume of individual deposits at Tk 1,405 crore.

To prevent future crises, the central bank has established a Banking Resolution Division tasked with making swift intervention decisions when financial institutions weaken. While the current process involves five banks and these nine NBFIs, Mansur indicated that additional institutions could be brought under this framework if needed.

Analysts have described the move as a necessary, albeit difficult, step toward greater transparency and long-term stability in Bangladesh’s financial landscape.