Written by The Banking Post
Investors are set to walk away empty-handed as Bangladesh Bank moves to liquidate nine non-bank financial institutions (NBFIs), marking the first large-scale wind-up in the sector’s history.
The central bank has decided to dissolve the firms to safeguard depositors and restore market stability. Of the nine, eight are listed on the bourses: FAS Finance and Investment, Bangladesh Industrial Finance Company, Premier Leasing and Finance, Fareast Finance and Investment, GSP Finance, Prime Finance, People’s Leasing, and International Leasing and Financial Services.
Years of loan scams, embezzlement, and weak governance have left the institutions insolvent, unable to meet depositor claims. Many directors stand accused of siphoning funds, further eroding trust.
Public and institutional investors hold 40.86% to 86.8% stakes in the listed firms, Dhaka Stock Exchange data show. But analysts warn recovery prospects are grim.
“General investors have hardly anything to hope for as they rank at the bottom when dues are settled,” said Akramul Alam, head of research at Royal Capital. Under liquidation rules, creditors, depositors, debenture holders, and preferential shareholders are paid first, with ordinary shareholders last.
Technically bankrupt, the nine firms report NPL ratios of 58.5% to 99.9%, wiping out their equity base. “When companies can’t repay depositors, expecting a return for general shareholders is unrealistic,” said Md Sajedul Islam of Shyamol Equity Management, adding that only a forced sale of sponsor-directors’ personal assets could yield partial recovery.
The collapse has already battered stocks, with the NBFIs among the top losers on the DSE last week, plunging 19% to 33%. Most now trade well below face value, some under Tk 2 a share.
Bangladesh Bank Governor Ahsan H Mansur assured depositors their money will be protected but stressed sponsor-directors must face accountability. The liquidations, to be carried out under the Finance Company Act 2023, will require High Court approval and the appointment of liquidators.
The regulator estimates the clean-up will cost Tk 80–90 billion. Earlier this year, 20 weak NBFIs were served show-cause notices, and nine were selected for liquidation after failing to respond satisfactorily.
The rot, however, is longstanding. Perhaps the starkest case is that of Prashanta Kumar Halder, the former Reliance Finance and NRB Global Bank executive who siphoned more than Tk 35 billion from four NBFIs — People’s Leasing, International Leasing, FAS Finance, and BIFC — using fake documents.
The Bangladesh Securities and Exchange Commission said it has yet to be officially notified but will act “to safeguard investor interests” once informed.
For shareholders, though, the outlook remains bleak.
