Central Bank Initiates Winding Up of Five NBFIs

Bangladesh Bank has finalized its decision to initiate the formal resolution and liquidation process for five insolvent non-banking financial institutions (NBFIs). The regulatory intervention was approved during a board of directors meeting on Tuesday at the central bank’s headquarters, chaired by Governor Mostakur Rahman.

To facilitate the winding-up process, the central bank will dissolve the boards of directors of the affected entities and install independent administrators to manage their assets and liabilities.

Scale of Liquidation and Depositor Safeguards

The five institutions slated for closure are FAS Finance and Investment Limited, Fareast Finance & Investment Limited, Aviva Finance Limited, Peoples Leasing and Financial Services Limited, and International Leasing and Financial Services Limited.

According to central bank officials, these five entities collectively hold 2,700 crore BDT (27 billion BDT) in retail deposits, representing approximately 27,000 individual accounts. The newly appointed administrators will conduct an immediate valuation of corporate assets to begin the disbursement process. Under the current central bank framework, individual retail depositors will receive a maximum initial payout of up to 10 lakh BDT (1 million BDT).

Senior analysts attribute the collapse of these institutions to protracted financial irregularities, poor corporate governance, and coordinated credit scams. Most notably, the controversial financier P.K. Halder stands accused of embezzling roughly 3,500 crore BDT from Peoples Leasing, International Leasing, FAS Finance, and BIFC, a systemic drain that ultimately triggered their insolvency.

Probationary Window for Secondary Tier

The central bank board reviewed the performance metrics of nine deeply distressed financial firms during its session. While five were selected for immediate liquidation, the remaining four were granted a conditional three-month probationary window to stabilize their operations.

This secondary group comprises Bangladesh Industrial Finance Company (BIFC), Premier Leasing & Finance Limited, GSP Finance Company, and Prime Finance & Investment Limited.

These four companies must demonstrate a clear and verifiable capacity to refund the principal capital of their retail depositors within the next 90 days. Any institution failing to meet this threshold will automatically be placed into the liquidation pipeline alongside the initial five.

Default Profiles and Institutional History

The regulatory path to liquidation began in May of last year, when Bangladesh Bank issued show-cause notices to twenty separate NBFIs struggling with severe liquidity shortages and a failure to honor client cash withdrawals. A subsequent evaluation narrowed the critical list down to nine high-risk entities, leading directly to Tuesday’s intervention.

The specific non-performing loan (NPL) ratios recorded at the end of December for the liquidated institutions are outlined below: