Bangladesh Bank has finalised the decision to liquidate six non-bank financial institutions (NBFIs), while granting a three-to-six-month grace period to three others to improve their financial indicators.
The decision was reached during a board meeting of the central bank on Tuesday, chaired by Governor Ahsan H Mansur. The move was confirmed by Arief Hossain Khan, executive director and spokesperson of Bangladesh Bank.
The nine institutions initially under consideration for liquidation were FAS Finance, BIFC, Premier Leasing, Fareast Finance, GSP Finance, Prime Finance, Aviva Finance, People’s Leasing, and International Leasing.
Following a review of their recovery plans and recent hearings, the board decided not to liquidate GSP Finance, Prime Finance, and Bangladesh Industrial Finance Company (BIFC) immediately, providing them more time to stabilize.
Central bank officials noted that the liquidation process follows show-cause notices issued to 20 NBFIs in May last year due to high defaulted loans and failures to return deposits.
The recovery plans for the nine targeted institutions were found unsatisfactory, with defaulted loans reaching 75 to 98 percent due to long-term mismanagement and irregularities.
Sector insiders attributed the collapse of these institutions to massive scams during the previous government’s tenure. Notably, PK Halder faces allegations of embezzling at least Tk 3,500 crore from People’s Leasing, International Leasing, FAS Finance, and BIFC.
Regarding the repayment of funds, Governor Ahsan H Mansur stated in a recent press conference that individual depositors of the nine ailing NBFIs will begin receiving their principal amounts in February.
An assessment of the institutions’ assets is currently underway to determine if shareholders will receive any funds. The government has provided a verbal approval for approximately Tk 5,000 crore to facilitate these payments.
However, depositors will only receive their principal amount, and no interest will be paid.
In other board decisions, the central bank approved a proposal to cancel the contract with the inter-transaction platform, Binimoy.
Instead, the board was informed of a potential agreement with the Gates Foundation’s IIPS, and Bangladesh Bank will now proceed toward a formal contract with them.
