The government is stepping in to protect individual depositors of nine failing non-bank financial institutions (NBFIs) with a Tk5,000 crore support package for their liquidation. Bangladesh Bank Governor Ahsan H Mansur announced that individual depositors will receive their full principal back, but no interest will be paid. This decision highlights a stark contrast between individual and institutional investors, as the latter will have to rely on asset recovery proceeds from the liquidation of the firms' assets.
The Bangladesh Bank's board made the decision to liquidate these NBFIs in December due to massive loan defaults, which led to the collapse of their loan portfolios. The nine institutions selected for liquidation are FAS Finance, Bangladesh Industrial Finance Company (BIFC), Premier Leasing, Fareast Finance, GSP Finance, Prime Finance, Aviva Finance, People's Leasing, and International Leasing. The central bank will appoint liquidators for each NBFI to assess assets and liabilities and sell off recoverable loans, properties, and investments, with the proceeds distributed among creditors.
The government's intervention is particularly significant because NBFIs were only recently brought under the amended Bank Resolution Ordinance 2025 and have not yet contributed to the insurance fund. As a result, the government has decided to cover depositors directly in this round of liquidations. From this year onwards, NBFIs will begin paying into the deposit insurance fund, ensuring they are protected under the same framework as banks.
Despite the government's efforts, the Bangladesh Bank Governor expressed little hope for recovery, as assessments found no viable path for these institutions to return to solvency. The liquidation process has already begun, with show cause notices served to the nine NBFIs, and the final decision to declare them dysfunctional will be made if they fail to provide a satisfactory explanation.
