Written by The Banking Post
Shareholders of eight listed non-bank financial institutions (NBFIs) facing liquidation are likely to suffer losses far deeper than current market values suggest, as the Bangladesh Bank moves ahead with the country’s first large-scale wind-up of failing financial institutions.
Based on prevailing share prices, investors stand to lose about Tk 1.36 billion in market value. But the real exposure is much larger. The eight companies together have paid-up capital of Tk 14.84 billion, reflecting the face value of shares at Tk 10 each. Many investors bought these shares in the secondary market at prices well above face value, amplifying their losses.
The damage is evident in recent price movements. Bangladesh Industrial Finance Company’s share, which traded above Tk 12 two years ago, slipped to Tk 1.50 by Tuesday. FAS Finance fell even more sharply, closing at Tk 0.63, down from Tk 6.20 over the same period.
The central bank is set to liquidate nine NBFIs this week, eight of which are listed: FAS Finance, Bangladesh Industrial Finance Company, Premier Leasing, Fareast Finance, GSP Finance, Prime Finance, People’s Leasing, and International Leasing. The move is intended to safeguard depositors and restore stability in a sector weighed down by years of irregularities and loan fraud.
Except for Prime Finance, all the listed entities reported negative net asset values, ranging from Tk 0.62 to Tk 219.03 per share, indicating that their liabilities far exceed their assets. The institutions collectively account for 52 per cent of defaulted loans in the NBFI sector, estimated at around Tk 251 billion at the end of 2024. FAS Finance has the highest non-performing loan ratio at 99.93 per cent, while GSP Finance has the lowest at 59 per cent.
Given the scale of insolvency, ordinary shareholders may ultimately receive nothing. Bangladesh Bank Governor Ahsan H Mansur said any payout to shareholders would depend on asset recoveries after liquidation. “Based on assessments of the institutions’ assets, a decision will be taken on whether shareholders will receive anything,” he said at a press briefing on Monday.
Market analysts say expectations should remain low. “Given the current financial condition, general investors have little to hope for, as they would be at the bottom of the repayment hierarchy,” said Akramul Alam, head of research at Royal Capital. Under liquidation rules, external creditors are paid first, followed by depositors, debenture holders and preferential shareholders, leaving common shareholders last in line.
On depositor protection, the central bank said individual depositors would recover their principal amounts before Ramadan in February, backed by verbal government approval for around Tk 50 billion. Total deposits at the affected NBFIs stood at Tk 153.70 billion, of which Tk 35.25 billion belonged to individual depositors and Tk 118.45 billion to banks and corporate clients.
The collapse of the institutions has also raised questions about accountability. Analysts point to prolonged governance failures, weak oversight and misleading financial disclosures that masked the true scale of bad loans. “The financial distress is not sudden. The institutions have long been plagued by poor governance and unchecked irregularities,” said Salim Afzal Shawon, head of research at BRAC EPL Stock Brokerage, adding that auditors, credit rating agencies and regulators must also be held to account.
Bangladesh Bank has acknowledged past constraints. Spokesperson Arief Hossain Khan said political influence and regulatory limitations under the previous regime hindered effective oversight, while some borrowers obtained court orders to avoid being classified as defaulters.
The liquidations will be carried out under the Bank Resolution Ordinance 2025, the country’s first comprehensive legal framework for resolving failing banks and non-bank financial institutions.
