Non-bank financial institutions (NBFIs) are edging deeper into crisis. While the central bank’s April–June 2025 statistics show modest balance-sheet growth, more recent figures and regulatory actions reveal a sector under acute strain, weighed down by soaring defaults, collapsing confidence, and looming liquidations.
According to Bangladesh Bank, the 35 NBFIs expanded assets by just 0.58% in the second quarter of 2025. Deposits rose slightly, concentrated in fixed-term accounts and overwhelmingly in Dhaka and Chattogram.
By March 2025, however, the industry’s underlying weaknesses had sharpened. Defaulted loans surged to Tk 27,189 crore, representing 35.31% of outstanding loans, up from 33.25% three months earlier.
Stress tests run by Bangladesh Bank show only nine institutions remain “sound,” while more than 20 are classed as weak. A handful of firms – including FAS Finance, Fareast Finance, People’s Leasing, International Leasing, Aviva Finance, and others – report default ratios of 90–99%, rendering them effectively insolvent.
The central bank is now moving to act. It has initiated the liquidation of nine troubled NBFIs, with small depositors first in line for repayment. At the same time, 20 firms have been placed on a red list and face possible license cancellation unless they can shore up capital and improve recoveries.
Liquidity pressures are intensifying as depositors grow wary. Protests have erupted outside People’s Leasing branches, with clients accusing both management and regulators of complicity in years of mismanagement. New deposits are drying up at weaker firms, forcing reliance on short-term stopgaps.
Analysts warn that the sector’s capital adequacy remains paper-thin. “The buffer is barely above regulatory floors – one shock could push several institutions into collapse,” said economic analyst Md Mazedul Haque.
Regulators are also exploring mergers of weaker firms with healthier ones, but critics argue that, without governance reform, such moves may merely shift risks rather than resolve them.
The crisis places Bangladesh’s financial architecture at a crossroads. NBFIs were once envisioned as engines of long-term financing and financial inclusion, complementing banks by funding housing, SMEs, and infrastructure. Instead, decades of mismanagement, political influence, and weak oversight have left them fragile.
