Funding gap of Tk5,600cr stalls NBFI liquidation
Depositors stage protest as reimbursement uncertain.
The liquidation of six troubled non-bank financial institutions, a decision taken by the interim government on the central bank's recommendation, will not proceed this fiscal year as the current government has been unable to allocate the Tk5,600 crore set aside to reimburse depositors, officials said.
The delay has driven those depositors onto the streets. Today (6 May), more than a hundred of them gathered in silent protest outside the Bangladesh Bank headquarters, their faces covered with black cloth.
Their demand was straightforward: an immediate, realistic, and actionable roadmap for returning their money, in line with the July 2026 deadline cited by former governor Ahsan H Mansur.
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"A clear timeline was given. We are holding them to it," one protester said.
Responding to queries, central bank spokesperson Arief Hossain Khan said the liquidation decision had been made during the interim administration, when assurances were given that necessary funds would be provided to reimburse depositors. "Based on that assurance, the former governor announced the liquidation."
According to him, the current government is prioritising spending on its political programmes, including social support initiatives like Family Card, Farmer's Card, etc, leaving insufficient fiscal space to finance the liquidation process at present.
"If the government is given some time and funding is secured, the liquidation process will begin, and depositors will then receive their money," he said.
The spokesperson noted that the financial condition of the six to seven institutions was so weak that revival was no longer feasible, prompting the decision to proceed directly with liquidation rather than merger.
The central bank board had approved the liquidation of six institutions on 27 January. The entities are FAS Finance, Premier Leasing, Fareast Finance, Aviva Finance, People's Leasing and International Leasing, all of which have non-performing loan ratios ranging from 75% to 99%.
A senior official from the central bank's Bank Resolution Department said preparations for liquidation are complete, but implementation hinges entirely on government funding.
He added that discussions have been held with the governor, who indicated that while all six institutions may not be liquidated simultaneously, the process will move forward gradually. However, no assurance has been given that it will be completed within the current fiscal year.
An official from the Department of Financial Institutions and Markets, speaking on condition of anonymity, said the government should clearly communicate its decision, as depositors continue to seek answers without receiving any definitive timeline.
He described cases of severe hardship, including one depositor who had sought assistance while undergoing medical treatment but later died due to a lack of funds.
Depositors demand urgent action
An alliance representing more than 12,000 depositors of the six institutions has formally urged the central bank to take immediate steps to facilitate the return of their long-stuck funds.
In a memorandum submitted to the governor, the platform said depositors have been facing acute financial hardship, mental distress and a humanitarian crisis as their savings have remained locked for nearly seven years.
"Many depositors are being deprived of treatment for critical illnesses such as cancer, kidney disease and heart conditions due to a lack of funds," the memorandum said, adding that several have died without receiving necessary medical care.
The alliance called on the central bank, as the regulator, to take urgent action and ensure a clear roadmap for repayment within the previously announced timeframe.
Protesters said many had invested retirement benefits and proceeds from the sale of land in these institutions to support household expenses, but have been unable to access their savings for years.
"After waiting for seven years, we still have not received our money. Our patience has run out, which is why we have taken to the streets," one depositor said.
Sector under strain
The broader non-bank financial sector remains under significant stress, with the central bank identifying 20 out of 35 institutions as distressed.
These troubled institutions collectively hold loans worth Tk25,808 crore, of which Tk21,462 crore are classified as non-performing, representing 83.16%. Against this, the value of collateral stands at Tk6,899 crore.
In contrast, the remaining 15 relatively stable institutions reported a non-performing loan ratio of 7.31%, generating profits of Tk1,465 crore last year and maintaining a capital surplus of Tk6,189 crore.
Deposits in the 20 distressed institutions amount to Tk22,127 crore, including approximately Tk4,971 crore in individual deposits. Central bank officials believe that this amount may be required initially to support liquidation and restructuring efforts.
The regulator has also assured that employees of the affected institutions will receive all benefits in accordance with service rules following liquidation.
