9 financial institutions to be declared non-viable within this week: BB governor
According to the central bank’s data, these institutions suffer from severe loan defaults, with non-performing loan ratios ranging from 70% to as high as 99%.
Bangladesh Bank Governor Ahsan H Mansur has announced that nine non-bank financial institutions (NBFIs) will be declared "non-viable" within this week, as part of a broader effort to restore discipline and stability in the financial sector.
Responding to questions from journalists at a press briefing at the central bank headquarters in Dhaka today (5 January), he also said independent auditors will be appointed to assess the true financial condition of the institutions identified as non-viable.
"The objective is to determine the actual size of their liabilities or negative net worth – whether it is Tk100 crore or Tk10,000 crore – so that decisions can be based on accurate data," he said.
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Earlier, on 30 November, the Bangladesh Bank board gave preliminary approval to liquidate the nine NBFIs. These include People's Leasing and Financial Services, International Leasing and Financial Services, Aviva Finance, FAS Finance and Investment, Fareast Finance and Investment, Bangladesh Industrial Finance Company (BIFC), Premier Leasing and Finance, GSP Finance Company, and Prime Finance and Investment Limited.
According to the central bank's data, these institutions suffer from severe loan defaults, with non-performing loan ratios ranging from 70% to as high as 99%.
The governor expressed optimism that private-sector depositors of these institutions would receive repayment of their principal amounts during the month of Ramadan. However, he cautioned that shareholders were unlikely to recover their invested capital.
To protect ordinary depositors, the government plans to use a special fund to facilitate repayments, he added.
Asked about other weak banks in the sector, Mansur said the central bank's Bank Resolution Department was actively working on recovery plans. He noted that Islami Bank Bangladesh and United Commercial Bank (UCB) had already managed to restore solvency.
Other vulnerable banks are being provided with a clearly defined action plan, described as a "pathway to success," to help them meet depositor obligations, he said.
The governor added that resolving the remaining weak banks could require an additional Tk20,000 crore.
Responding to questions about loan defaulters contesting elections, Mansur said the central bank is bound to comply with stay orders issued by courts.
He clarified that eligibility of loan defaulters to participate in elections falls under the jurisdiction of the government and the judiciary, leaving no scope for direct intervention by the central bank.
