Depositors to Receive Funds in Two Tranches

After years of uncertainty in Bangladesh’s non-bank financial institution (NBFI) sector, individual depositors are finally set to receive long-awaited relief. The Bangladesh Bank has confirmed that arrangements are under way to refund individual depositors of nine NBFIs that have been earmarked for liquidation or permanent closure. According to central bank officials, approximately BDT 50 billion will be required to meet these obligations, and the government has already pledged to provide the necessary funds. On the strength of this commitment, Bangladesh Bank is now moving ahead with the formal liquidation process.

Under the central bank’s plan, each of the nine institutions will be placed under the control of an administrator appointed from Bangladesh Bank. In addition, two officials will be assigned to assist in overseeing operations. Once administrators assume control, the institutions will be formally declared non-operational, effectively freezing all regular business activities. Refunds to individual depositors will begin as soon as government funds are released.

The nine NBFIs facing closure are: Peoples Leasing, International Leasing, Bangladesh Industrial Finance Company (BIFC), FAS Finance, Aviva Finance, Fareast Finance, GSP Finance, Prime Finance and Premier Leasing. Several of these institutions—particularly Peoples Leasing, International Leasing, BIFC and FAS Finance—collapsed amid large-scale irregularities linked to the controversial financier Prashant Kumar Halder, widely known as PK Halder. Aviva Finance was also associated with business interests connected to the S Alam Group, with whom PK Halder reportedly maintained close ties.

During the tenure of the now-ousted Awami League government, these institutions were repeatedly accused of financial mismanagement, weak governance and corruption. As a result, non-performing loans surged to alarming levels, eventually exceeding 90 per cent of total loan portfolios across the nine firms. This erosion of asset quality left them unable to honour depositor claims, triggering prolonged distress among thousands of individual savers.

Bangladesh Bank Governor Ahsan H Mansur recently stated at a press briefing that the government’s financial support would ensure full repayment of individual depositors’ funds. The authorities aim to complete asset valuation and begin disbursement before Ramadan. However, since government funding will be released in two phases, depositors will also receive their money in two instalments.

Deposit Profile of the Nine NBFIs (BDT crore)

Once individual depositors are fully repaid, the appointed administrators will act as liquidators. They will initiate the sale of movable and immovable assets, with proceeds used gradually to settle claims of institutional depositors. The liquidation process will conclude through formal court proceedings.

It is noteworthy that Bangladesh Bank initially considered closing 20 NBFIs. However, 11 institutions submitted restructuring plans and were granted time to recover. Despite these efforts, the NBFI sector continues to grapple with a heavy burden of bad loans. As of the end of June last year, non-performing loans in the sector stood at BDT 275.41 billion, representing 35.72 per cent of total disbursed loans.

Analysts believe that the PK Halder-linked scandals inflicted long-term damage on confidence in the NBFI sector. Nevertheless, the decision to prioritise repayment to individual depositors is widely seen as a crucial step towards restoring trust and stabilising Bangladesh’s broader financial system.