9 NBFI Liquidations in Bangladesh: Major Shake-up in Bangladesh’s Financial Sector. Are You Affected?
The financial sector is witnessing a major shift with the NBFI liquidation in Bangladesh. The central bank’s decision to liquidate nine non-bank financial institutions (NBFIs), all of which are in dire straits, is a key development. This move, prompted by widespread loan defaults and capital depletion, has led to a government-backed support package worth Tk5,000 crore. For those with money in these institutions, whether depositors or investors, grasping the details of this liquidation process is essential for assessing the security of their assets.
The news has mixed effects on those with deposits or investments. The government has announced a support package of Tk5,000 crore, but the impact will differ significantly for individual savers versus institutional investors.
Here’s a look at what this liquidation means and which companies are involved.
Key Facts About NBFI Liquidation in Bangladesh
According to Bangladesh Bank Governor Ahsan H. Mansur, the central bank sees no viable path for these institutions to return to solvency. The newly enacted Bank Resolution Ordinance 2025 outlines the following steps:
- Individual Depositors Protected (Principal Only): The government has agreed to provide the funds necessary to ensure that individual depositors in these nine NBFIs receive their full principal.
- No Interest Payments: Individual depositors will not receive accrued interest on their deposits.
- Institutional Investors at Risk: There is no government guarantee for institutional depositors. They will receive payouts only from funds recovered through the liquidation of the firms’ assets. (e.g., if only Tk50 is recovered for every Tk100 of liability, institutions only get Tk50).
- The Tk5,000 Crore Cap: These nine NBFIs were selected for the first phase of liquidation because their combined depositor exposure falls within the government’s fiscal limit of Tk5,000 crore for this bailout.
- Future Insurance Coverage: Although these non-bank financial institutions (NBFIs) have not yet contributed to the deposit insurance fund, they’ll be included in the deposit insurance scheme this year, which guarantees up to Tk2 lakh.
Investor Alert: Listed vs. Unlisted Affected Cos.
This is a significant development for stock market investors on the Dhaka Stock Exchange (DSE). Of the nine NBFIs facing liquidation, eight are publicly listed, meaning their shares are traded on the DSE.
If you own shares in these companies, you should know that the central bank is dissolving them due to their unlikely recovery.
The 9 NBFIs Slated for Liquidation:
Listed on DSE:
- FAS Finance & Investment Limited (FASFIN)
- Bangladesh Industrial Finance Company Limited (BIFC)
- Premier Leasing & Finance Limited (PREMIERLEA)
- Fareast Finance & Investment Limited (FAREASTFIN)
- GSP Finance Company (Bangladesh) PLC (GSPFINANCE)
- Prime Finance & Investment Ltd. (PRIMEFIN)
- Peoples Leasing and Fin. Services Ltd. (PLFSL)
- International Leasing & Financial Services Limited (ILFSL)
Unlisted:
- Aviva Finance
Regarding the wider “Red Zone” list: Last January, the regulator identified twenty non-bank financial institutions (NBFIs) as financially troubled, placing them in the “red” category. Although only nine are currently undergoing liquidation, investors should exercise caution with the remaining distressed entities.
Other companies listed on the DSE that were part of the initial broader “red” classification include Bay Leasing (BAYLEASING), Islamic Finance (ISLAMICFIN), Uttara Finance (UTTARAFIN), Phoenix Finance (PHOENIXFIN), First Finance (FIRSTFIN), and Union Capital (UNIONCAP).
What’s next?
The Bangladesh Bank has already issued show-cause notices to the nine NBFIs. Should they fail to provide satisfactory explanations for their financial situations, they will be formally declared dysfunctional. Liquidators will then be appointed to evaluate assets, sell properties, and oversee payments to creditors.
This situation is evolving, and affected depositors should stay informed by monitoring announcements from the Bangladesh Bank on the claims process.
