Bangladesh Bank has taken a major step to address the long-standing crisis in the country’s financial sector. The central bank’s board has decided to close down nine weak and troubled non-bank financial institutions (NBFIs).

The decision was taken at a meeting chaired by Governor Ahsan H Mansur on Sunday (November 30). The decision will be implemented as per the newly issued ‘Bank Resolution Ordinance-2025’, which is the first comprehensive framework for merging, restructuring or liquidating failed banks and NBFIs.

The 9 NBFIs on the list of closures are FAS Finance, Bangladesh Industrial Finance Company (BIFC), Premier Leasing, Fareast Finance, GSP Finance, Prime Finance, Aviva Finance, People’s Leasing and International Leasing.

These nine institutions are responsible for 52 percent of the total defaulted loans, which amounted to Tk 25,890 crore at the end of last year.

Depositors’ priority
Many institutions have not been able to return matured deposits for years. In this context, the Governor of Bangladesh Bank said, “The first goal is to return the money of depositors. The government has verbally approved about 5 thousand crore taka.”

According to the Central Bank, deposits worth Tk 15,370 crore are stuck in these 9 institutions. Of this, personal deposits amount to Tk 3,525 crore, and bank and corporate deposits amount to Tk 11,845 crore.

Among personal deposits, People’s Leasing has the highest amount of stuck deposits at Tk 1,405 crore, Aviva Finance at Tk 809 crore, International Leasing at Tk 645 crore, Prime Finance at Tk 328 crore and FAS Finance at Tk 105 crore.

Seven out of nine companies have a net asset value per share of negative 95 taka—meaning that even if all assets are sold, shareholders will have nothing.

Experts say that weak oversight, loans to related parties, failure to recover accumulated debts, and artificially overstating assets have left many institutions virtually bankrupt for years.

Earlier this year, Bangladesh Bank identified 20 risky NBFIs in the ‘red category’; from there, 9 were brought to the closure list.

The fate of 11 companies
that have been asked to submit recovery plans is hanging in the balance. They include CVC Finance, Bay Leasing, Islamic Finance, Meridian Finance, Hajj Finance, National Finance, IIDFC, Uttara Finance, Phoenix Finance, First Finance and Union Capital.

Bangladesh Bank has granted a license to ‘Sammilit Islami Bank’, formed by merging five
troubled Sharia-compliant banks. It is starting its journey as the largest Islamic bank merger in the country’s history.