Bangladesh Bank Raises Refund Cap For Depositors Of 4 Failing NBFIs To Tk 50 Lakh From Tk 10 Lakh

Dhaka, September 25, 2026 — The Bangladesh Bank has prepared a scheme to repay individual depositors of four non-bank financial institutions (NBFIs) that are set to be liquidated. Under the scheme, individual depositors will initially receive up to Tk 50 lakh of their principal amount — a significant increase from the earlier cap of Tk 10 lakh.

🏦 The decision was taken at a meeting of the Bangladesh Bank board of directors yesterday (24 September), chaired by Governor Md Mostaqur Rahman.

🏢 The Four Failing NBFIs

The four institutions are:

• 🏢 Aviva Finance
• 🏢 Fareast Finance
• 🏢 FAS Finance
• 🏢 International Leasing

💰 Revised Refund Structure

The central bank had earlier said that depositors would receive a maximum of Tk 10 lakh. However, it has revised the decision and introduced the new scheme to increase the amount payable to individual depositors:

• ✅ Deposits up to Tk 50 lakh: Full principal repayment.
• ✅ Tk 50 lakh to Tk 1 crore: Maximum Tk 80 lakh (full principal for first Tk 50 lakh, plus a portion of the excess).
• ✅ Tk 1 crore to Tk 1.5 crore: Tk 80 lakh for first Tk 1 crore + 50% of remainder.
• ✅ Tk 1.5 crore to Tk 2 crore: Tk 1.05 crore for first Tk 1.5 crore + 40% of excess.
• ✅ Tk 2 crore or more: Tk 1.25 crore for first Tk 2 crore + 30% of excess.

A Bangladesh Bank executive director told TBS that individual depositors of the four institutions will be repaid their principal in full up to Tk 50 lakh. Those with larger deposits will be repaid after a certain amount is deducted from their principal.

📜 Background: NBFI Board Dissolution

On 9 August 2026, Bangladesh Bank dissolved the boards of the four institutions and declared their managing director posts vacant. The central bank then initiated the liquidation process — with the deposit refund scheme being a key component of the resolution.

💼 Why This Matters For Bangladesh's Financial Sector

The enhanced refund cap is significant for several reasons:

• 👥 Depositor protection — the Tk 50 lakh cap represents a 5x increase from the earlier Tk 10 lakh, providing much greater protection for individual depositors.
• 👥 Financial stability — by ensuring depositors are meaningfully compensated, the scheme reduces the risk of broader financial panic.
• 👥 NBFI sector confidence — the scheme demonstrates that the central bank will protect depositors even when NBFIs fail, supporting confidence in the broader NBFI sector.
• 👥 Precedent for future resolutions — the tiered refund structure establishes a model for handling future NBFI failures.
• 👥 IMF programme alignment — the resolution of failing NBFIs supports the banking sector reform agenda under the IMF programme.

📊 Bangladesh's NBFI Sector Context

Bangladesh's NBFI (Non-Bank Financial Institution) sector comprises approximately 35 institutions. Key facts:

• 🏢 Total NBFI assets: approximately Tk 1.0-1.5 lakh crore.
• 🏢 NBFI deposit base: significantly smaller than the banking sector but still serving millions of depositors.
• 🏢 Key NBFI services: leasing, housing finance, consumer finance, SME lending, and investment banking.
• 🏢 Regulatory framework: governed by the Financial Institutions Act, 1993, with BB as the regulator.
• 🏢 Sector challenges: elevated NPLs, governance weaknesses, and limited capital buffers in several institutions.

🚧 The Four Failing NBFIs: What Went Wrong

The four NBFIs being liquidated faced multiple challenges:

• ⚠ Elevated non-performing loans (NPLs) — with significant portions of their loan portfolios classified as bad debts.
• ⚠ Governance failures — with weak board oversight and risk management.
• ⚠ Capital adequacy shortfalls — with insufficient capital to absorb losses.
• ⚠ Liquidity crises — with inability to meet depositor withdrawal requests.
• ⚠ Regulatory violations — including lending to related parties and concentration risks.

🏦 The Resolution Framework

The deposit refund scheme is part of Bangladesh Bank's broader NBFI resolution framework:

• 📜 Board dissolution — removing existing boards and appointing BB administrators.
• 📜 Asset recovery — pursuing recovery of NPLs through legal channels.
• 📜 Depositor protection — through the refund scheme.
• 📜 Liquidation — winding down the institutions after depositor protection.
• 📜 Creditor settlement — addressing claims from creditors and other stakeholders.

📜 Looking Ahead

For the depositors of Aviva Finance, Fareast Finance, FAS Finance, and International Leasing, the enhanced refund cap provides significantly better recovery prospects — with deposits up to Tk 50 lakh receiving full principal repayment.

The coming months will see:

• 📝 Implementation of the refund scheme — with depositors receiving their payments according to the tiered structure.
• 📝 Asset recovery proceedings — as BB pursues recovery of NPLs to fund further depositor payments.
• 📝 Liquidation completion — winding down the four institutions' remaining operations.
• 📝 Broader NBFI sector reform — using the lessons from these failures to strengthen the sector's regulatory framework.

For Bangladesh's financial sector, the enhanced refund cap signals the central bank's commitment to depositor protection — even when financial institutions fail. This commitment is essential for maintaining public confidence in the broader financial system and supporting the government's financial sector reform agenda.