HC issues show-cause notice on liquidation of 9 NBFIs

The High Court has issued a show-cause notice asking why the Bangladesh Bank's decision to liquidate nine non-bank financial institutions (NBFIs) should not be considered illegal.

A High Court bench led by Justice Ahmed Sohel issued the order today (11 December) during a hearing on an application filed on behalf of Peoples Leasing, which is challenging the winding-up decision for the nine NBFIs.

Barrister Mahfuzur Rahman Millon, lawyer for Peoples Leasing, told The Business Standard that the court has asked Bangladesh Bank (BB) to explain the legality of proceeding with liquidation while appointed boards remain in place for these institutions.

According to BB sources, the central bank had moved to shutter the troubled firms due to years of financial irregularities, chronic mismanagement, and their failure to repay depositors. The nine entities identified for closure include Peoples Leasing, International Leasing, Bangladesh Industrial Finance Company (BIFC), FAS Finance, Aviva Finance, Fareast Finance, GSP Finance, Prime Finance, and Premier Leasing & Finance.

The central bank has requested Tk5,000 crore from the government to repay small depositors.

Bangladesh Bank Governor Ahsan H. Mansur first announced the decision to dissolve the nine institutions at a high-level meeting on 9 October, held to review preparations for the country's graduation from Least Developed Country (LDC) status. The meeting was attended by the Chief Adviser, Professor Muhammad Yunus, other advisers and senior government officials. 

After the meeting, Chief Adviser's press secretary Shafiqul Alam told reporters that the governor had said the nine financial institutions would be liquidated.

Out of the nine NBFIs facing closure, four are linked to Prashanta Kumar (P K) Halder and one to S Alam.