Written by The Banking Post
The number of individual borrowers of non-bank financial companies (NBFCs) fell in the April–June quarter of 2025, reflecting ongoing stress in the sector as credit demand weakens and deposits shrink.
Bangladesh Bank data show total borrowers dropped to 119,995 at the end of June, down 1.13 per cent from 121,310 in the previous quarter. Loan accounts also fell 2 per cent to 204,965.
A closer look at the figures reveals gender contrasts: male borrowers declined by 2.24 per cent, while women borrowers rose by 5.64 per cent, indicating a small but notable rise in women’s participation.
Lending Constrained by Deposits
Sector insiders attribute the contraction to both slowing private investment and a funding squeeze. “The overall financial sector has been under stress as private investment slowed significantly, reducing the demand for credit. At the same time, deposit mobilisation also dropped, restricting NBFCs’ capacity to lend,” said a senior executive.
Md Kyser Hamid, Managing Director and CEO of Bangladesh Finance, said the situation worsened after Bangladesh Bank published a list of 20 “red-category” NBFCs. “There was a panic withdrawal after the release of the list. Depositors pulled out their funds. And once deposits shrink, lending naturally suffers,” he said, adding that some recovery has been visible since June.
Central Bank’s Red List
The central bank placed 20 NBFCs in the “red” category after their loan exposures exceeded three times the value of their collateral. The move highlighted governance concerns and risk management weaknesses across the industry.
Delayed repayments and defaults in recent years have already triggered repeated protests from depositors demanding their money back. Analysts warn the latest contraction could further erode investor confidence.
“While banking sector troubles often grab headlines, the challenges in NBFCs are equally serious because they play a crucial role in providing alternative financing for businesses and individuals,” said the CEO of an NBFC, requesting anonymity. “A prolonged crisis in this sector could further dampen investment sentiment.”
Wider Impact
NBFCs, formerly known as NBFIs, provide loans, leasing, and investment opportunities as alternatives to commercial banks. Though their share in the financial system is smaller, their health is seen as critical for supporting private-sector credit growth, particularly among small and medium enterprises.
