BB liquidation move triggers sell-off in 5 NBFIs, lifeline lifts 3 others

Infographic: TBS

Shares of several non-bank financial institutions witnessed sharp movements yesterday as the Bangladesh Bank's decision to liquidate a group of deeply troubled firms while granting a reprieve to a few others triggered strong reactions from investors.

Five NBFIs slated for liquidation have experienced steep price corrections, reflecting investor concerns over the near-total erosion of shareholder value. FAS Finance, Peoples Leasing, Premier Leasing, Fareast Finance, and International Leasing all suffered notable declines, with their share prices hovering far below the face value of Tk10.

Market participants said the sell-off was driven by heightened fears that equity holders of liquidation-bound institutions would be left with little or no recovery once the winding-up process begins.

To suspend the trading of these NBFIs following the liquidation decision, the Dhaka Stock Exchange sent a letter on the day to the Bangladesh Securities and Exchange Commission, but the regulator has yet to make any decision over this issue.

In contrast, three other NBFIs – Prime Finance, Bangladesh Industrial Finance Company and GSP Finance – posted modest gains after the central bank allowed them a three-month window to improve their financial health. 

Investors appeared to interpret the decision as a short-term lifeline, betting on the possibility that these firms might avoid liquidation if they succeed in mobilising funds and recovering defaulted loans within the stipulated time.

The Bangladesh Bank made the decision at a board meeting held on Tuesday, where it resolved to proceed with the liquidation of six NBFIs deemed unviable due to prolonged irregularities, corruption and mismanagement. 

At the same time, the central bank agreed to temporarily spare three institutions, citing their commitment to make a last-ditch effort to restore viability. Officials said the three firms would not be placed under liquidation for now and would be closely monitored during the recovery period.

Among the six NBFIs, only Aviva Finance is not listed on the stock exchanges.

According to a senior central bank official, the institutions were assessed based on three critical indicators: their failure to return depositors' money, extremely high levels of non-performing loans and severe capital shortfalls. Administrators will be appointed to oversee the three firms granted additional time, as they have reportedly sought fresh funds to stabilise operations.

Financial data underscores the depth of the crisis facing the liquidation-bound NBFIs. As of September 2025, International Leasing had accumulated losses exceeding Tk5,100 crore, with a negative net asset value per share and a non-performing loan ratio of nearly 98%. People's Leasing, FAS Finance, Premier Leasing and Fareast Finance also posted massive accumulated losses, deeply negative net asset values and NPL ratios close to or exceeding 90%, highlighting the near-collapse of their balance sheets.

Analysts said the stock market's reaction reflects a clearer differentiation by investors between institutions that still have a slim chance of survival and those that are effectively beyond rescue. However, they cautioned that even the three firms given a recovery window remain under significant risk, as restoring confidence, recovering bad loans and securing fresh capital within a short period will be extremely challenging.

The crisis in Bangladesh's NBFI sector has its roots in years of weak governance and large-scale financial irregularities, widely linked to Prashanta Kumar Halder. Since around 2014, Halder is alleged to have exercised covert control over multiple NBFIs, siphoning off funds through fraudulent loans and leaving the institutions crippled. That episode, market observers say, pushed the sector into a prolonged downward spiral from which many firms never recovered.