BB signal to make 9 NBFIs non-viable triggers free fall, investors left stranded

Shares of several troubled non-bank financial institutions (NBFIs) plunged sharply on Tuesday (6 January) as panic selling swept through the market following the central bank's clear signal that a group of weak lenders would soon be declared non-viable.

The sell-off reflected growing investor fears that equity holders could face a fate similar to that of shareholders in recently merged Islamic banks, where paid-up capital was wiped out entirely.

Trading data from the Dhaka Stock Exchange (DSE) showed that stocks of risky NBFIs suffered steep losses, with many hitting their daily circuit breakers. 

People's Leasing and Financial Services fell more than 10% to close at Tk0.51 per share, while FAS Finance dropped 10% to Tk0.63. Premier Leasing declined by the maximum allowed limit to Tk0.54, and Fareast Finance shed over 9% to end at Tk0.57. 

International Leasing also slid 9.52% to Tk0.57, while First Finance lost 8% to Tk2.30. Prime Finance, GSP Finance and Bangladesh Industrial Finance Company (BIFC) also posted significant declines.

Market insiders said the sharp fall was driven by a wave of sell orders after Bangladesh Bank Governor Ahsan H Mansur announced that nine NBFIs would be declared non-viable within the week. Following his remarks, investors rushed to exit positions in weak financial institutions, fearing a total erosion of shareholder value. However, many were unable to sell their holdings due to the absence of buyers, leaving a large volume of unexecuted sell orders on the trading system throughout the day.

"The market was flooded with sell orders, but there were practically no buyers," said a broker familiar with the trading activity. "Investors are trying to cut losses, but confidence has completely evaporated in these stocks."

The governor's comments came at a press briefing at the central bank headquarters on 5 January, where he said independent auditors would be appointed to assess the true financial condition of the identified NBFIs.

He explained that the objective was to determine the actual scale of liabilities or negative net worth, whether it stood at Tk100 crore or Tk10,000 crore, to enable informed decisions.

While he expressed hope that private-sector depositors would receive repayment of their principal during Ramadan, he cautioned that shareholders were unlikely to recover their investments.

Financial data paints a grim picture of the institutions now under scrutiny. As of September 2025, most of these NBFIs had accumulated massive losses and deeply negative net asset values.

International Leasing alone posted accumulated losses exceeding Tk5,100 crore, with its net asset value per share plunging to minus Tk219 and a non-performing loan (NPL) ratio nearing 98%.

People's Leasing recorded losses of over Tk4,800 crore and an NPL ratio of nearly 99%, while FAS Finance reported an NPL ratio of almost 100% alongside heavy negative equity.

Similar distress is evident across Premier Leasing, Fareast Finance, First Finance, GSP Finance and BIFC, underscoring years of weak governance, reckless lending and erosion of capital.

The central bank's move follows the issuance of a circular on 21 December, bringing NBFIs under the Bank Resolution Ordinance, 2025. Under this framework, Bangladesh Bank is empowered to take decisive actions, including winding up institutions that have remained in prolonged distress and failed to protect depositors' funds.

Earlier, on 30 November, the Bangladesh Bank board gave preliminary approval to liquidate nine NBFIs, including Peoples Leasing, International Leasing, FAS Finance, Fareast Finance, BIFC, Premier Leasing, GSP Finance and Prime Finance.

After that decision, the DSE sought explanations from several of the named institutions. In their responses, the companies claimed they had not yet received any formal directive or letter from the central bank regarding liquidation or winding-up procedures. Despite these assurances, market confidence continued to deteriorate.

A managing director of a brokerage firm said the firm had already restricted fresh buying in these shares following the Bangladesh Bank board's November decision. "We advised our clients to stay away from these stocks, given the extremely high risk and the possibility of capital write-offs," he said.

Investor anxiety has been amplified by recent developments in the banking sector, where the central bank completed the merger of five Shariah-based banks by reducing their paid-up capital to zero. Under a capital reduction order issued by the Bank Resolution Department, all shares of the merged banks were cancelled, effectively wiping out shareholder ownership without compensation. As a result, thousands of small investors lost their entire investments, and shares of five Islamic banks remain suspended from trading.

Market analysts warn that NBFI shareholders could face a similar outcome if the institutions are formally declared non-viable. "The regulator's priority is clearly depositors, not equity holders," said one analyst. "Once an institution is deemed beyond rescue, shareholders are at the bottom of the recovery ladder."