BB Takes Control of Four NBFIs as NPLs Near 100pc

Bangladesh Bank has taken a tough line against four deeply distressed non-bank financial institutions (NBFIs), declaring them inoperative and placing them under a resolution scheme as crippling capital shortages, staggering non-performing loans (NPLs) and mounting liabilities threaten depositors’ money.

The four institutions are Aviva Finance Limited, Fareast Finance & Investment Limited, FAS Finance & Investment Limited and International Leasing & Financial Services Limited.

The central bank announced the move on Sunday night following a decision by its Board of Directors after assessing the financial condition, viability and recovery prospects of the institutions.

According to Bangladesh Bank, the action was triggered by severe capital deficits, exceptionally high NPLs and investments, failure to maintain mandatory liquidity ratios, a sharp deterioration in earnings and the inability to meet obligations to depositors and creditors.

The latest intervention is part of Bangladesh Bank’s broader effort to restore corporate governance, accountability and financial discipline in the troubled NBFI sector while protecting depositors and creditors.

“More NBFIs are under our scrutiny,” a senior Bangladesh Bank official told The Daily Observer, adding that some institutions were allegedly resorting to questionable practices, including issuing fake bank cheques and harassing customers over legitimate claims.

To ensure a swift and effective resolution, Bangladesh Bank has appointed experienced senior officials as administrators and co-administrators for the four NBFIs. They will exercise direct control over their administration, management and rehabilitation.

The central bank expressed hope that the intervention would restore order and governance in the institutions and strengthen protection for depositors and other stakeholders. It also said all measures had been taken within the legal framework to rebuild public confidence in the financial system.

The scale of the crisis is reflected in the NPL figures. As of December 2025, FAS Finance & Investment had an NPL ratio of an extraordinary 99.99 per cent, followed by International Leasing at 99.44 per cent, Fareast Finance & Investment at 98.50 per cent and Aviva Finance at 93.93 per cent.

The four institutions are among nine financial institutions that Bangladesh Bank had identified as “non-operational” last year because of their persistent failure to repay depositors, excessive NPLs and severe erosion of capital.

The other five are People’s Leasing, Bangladesh Industrial Finance Company (BIFC), Premier Leasing & Finance, GSP Finance and Prime Finance.

According to Bangladesh Bank data, deposits with the nine distressed NBFIs total around Tk15,370 crore, including Tk3,525 crore belonging to individual depositors and Tk11,845 crore held by banks, companies and other institutional investors.

People’s Leasing has the largest share of trapped individual deposits at Tk1,405 crore, followed by Aviva Finance at Tk809 crore, International Leasing at Tk645 crore and Prime Finance at Tk328 crore.

The wider NBFI sector presents an equally alarming picture. Of Bangladesh’s 35 NBFIs, 20 have been classified by the central bank as troubled or distressed.

These 20 institutions have outstanding loans of Tk25,808 crore, of which Tk21,462 crore, or 83.16 per cent, have become defaulted. Against these loans, mortgaged collateral is valued at only Tk6,899 crore, covering just 26 per cent of the outstanding amount.

By contrast, the remaining 15 relatively healthy NBFIs have an average NPL ratio of around 7 per cent. They collectively earned Tk1,465 crore in net profit in 2024 and maintained a capital surplus of Tk6,189 crore.

Across the entire NBFI sector, defaulted loans stood at Tk27,541 crore as of June last year, accounting for 35.72 per cent of total outstanding loans.

The central bank’s latest action signals a decisive shift from regulatory monitoring to direct intervention as Bangladesh Bank moves to contain the NBFI crisis, protect depositors and prevent years of weak governance, bad lending and financial mismanagement from causing further damage to the financial system.