Bangladesh Bank Moves to Liquidate Five NBFIs with Tk 2,000cr Government Fund

Dhaka, August 14, 2026 — Bangladesh Bank is preparing to seek Tk 2,000 crore from the government's budget allocation to liquidate five non-bank financial institutions (NBFIs) that have already been declared non-viable. The funds would be used to make quick payments to individual depositors — including provident funds, personal trust funds, and cooperative savings — and help contain unrest in the financial sector as the central bank accelerates its banking resolution process.

💰 The Tk 2,000 Crore Liquidation Plan

The central bank plans to seek Tk 2,000 crore from the government's budget allocation to fund the liquidation of five NBFIs. Key parameters of the plan:

• 💰 Tk 2,000 crore — total estimated funding requirement for 5 NBFIs
• 💰 Tk 1,500 crore — initial requirement for 4 NBFIs (excluding People's Leasing)
• 👥 5 NBFIs targeted — 4 already declared non-viable + People's Leasing (under liquidation since 2019)
• 💸 Depositor repayment — priority for individual depositors up to Tk 10 lakh
• 🏛️ Budget allocation — funds to come from government budget

The initial allocation would be used to make quick payments to individual depositors and help contain unrest in the financial sector, a senior Bangladesh Bank executive said. “The money includes provident fund, personal trust fund, and other individual savings. Cooperative funds are also included as they comprise contributions from many ordinary people,” the official explained.

🏭 The Five NBFIs Targeted for Liquidation

The central bank recently brought four NBFIs under the Bank Resolution framework, declaring them non-viable:

• 🏭 Aviva Finance — declared non-viable, administrator appointed
• 🏭 Fareast Finance and Investment — declared non-viable, administrator appointed
• 🏭 FAS Finance and Investment — declared non-viable, administrator appointed
• 🏭 International Leasing and Financial Services — declared non-viable, administrator appointed
• 🏭 People's Leasing and Financial Services — under liquidation since 2019 (subject to court decision)

The next step is to initiate their liquidation, said the BB official. People's Leasing and Financial Services — placed under liquidation in 2019 — is also expected to be included in the current plan, subject to a court decision.

👥 Four Other NBFIs Given 3-Month Window

The BB official revealed that the central bank's decision initially covered nine institutions. Four, however, were given three months to regain financial viability under Section 15 of the Bank Resolution Act:

• 🏭 Prime Finance and Investment — given 3-month recovery window (July 2026)
• 🏭 GSP Finance Company (Bangladesh) — given 3-month recovery window
• 🏭 Bangladesh Industrial Finance Company — given 3-month recovery window
• 🏭 Premier Leasing and Finance — given 3-month recovery window

If these institutions fail to meet the conditions, they will also be brought fully under the resolution framework. Their sponsors have been asked to inject fresh capital as equity — rather than fixed deposits or other claim-bearing instruments. The funds will remain part of the institutions' capital and cannot later be withdrawn or reclaimed.

💸 Depositor Protection: First Priority

The general idea is to fully repay deposits of up to Tk 10 lakh — though whether the amount will be paid in phases is yet to be decided. The BB official explained the depositor protection logic:

• 👥 Up to Tk 10 lakh — full repayment to individual depositors
• 💰 Phased payment — structure under development
• 🤝 Asset recovery — if loans recovered, both government and depositors could recover full claims
• 📜 Depositor payment scheme — Bangladesh Bank developing framework
• 🏛️ First priority — depositors rank first under resolution law

Crucially, NBFIs are not covered by the Deposit Protection Act — meaning they have no insurance protection, no security, and no backup. “If they go into liquidation tomorrow, depositors are not legally guaranteed to receive anything,” the official noted. “That's why we're thinking of bringing them under the resolution framework first. Once they are, we can take various measures, including paying some money to the public.”

🚧 NBR Opposition and Funding Debate

The funding mechanism has sparked debate with the National Board of Revenue (NBR). The official revealed that the previous plan was to repay depositors in full. However, the NBR opposed funding the entire amount from the budget and suggested financing part of the payments from recovered assets.

The NBR's position reflects fiscal prudence concerns:

• 💰 Budget burden — Tk 2,000 crore is significant fiscal outlay
• 📜 Asset recovery — NBFIs have loan assets that could be recovered
• 🤝 Shared funding — NBR prefers budget + asset recovery combination
• 📈 Moral hazard — full budget funding could encourage future NBFI failures
• 🏛️ Precedent — sets framework for future bank resolutions

💼 Institutional vs. Individual Depositors

The BB's depositor protection plan distinguishes between individual and institutional depositors:

• 👥 Individual depositors — eligible for government-funded repayment (up to Tk 10 lakh)
• 🏢 Institutional depositors — not eligible for support, must wait for liquidation
• 📜 Legal order of priority — institutional depositors receive based on statutory hierarchy
• 💰 Asset recovery proceeds — distributed according to legal claims ranking
• 🚧 Shareholders — rank last, unlikely to receive anything

“Institutional depositors will not be eligible for such support,” the official said. “They will have to wait for liquidation and receive whatever they are entitled to under the legal order of priority.”

👥 Employee Protection

Employees of the NBFIs will at least receive their provident fund balances — providing some protection for workers caught in the resolution process. The broader employee transition framework includes:

• 💰 Provident fund balances — employees receive their PF savings
• 💼 Severance packages — per labour law requirements
• 🤝 Re-employment assistance — for qualifying staff in resolution process
• 📜 Administrator oversight — ensures employee rights protected

🌐 The Broader Banking Sector Cleanup

The NBFI liquidation plan is part of Bangladesh Bank's broader banking sector cleanup — which has been a priority under the current government. Key elements of the cleanup include:

• 🏛️ Bank Resolution Act 2026 — stronger BB powers for troubled institutions
• 👥 Non-viable NBFI declarations — 4 NBFIs declared non-viable in 2026
• 💰 Bank recapitalisation — government capital injection for troubled banks
• 🔍 Forensic audits — of large defaulters and connected lending
• 📜 Administrator appointments — BB-appointed administrators for troubled institutions
• 🚧 Loan classification freeze — for specific distressed groups (e.g., City Group)

🌏 Strategic Context: Financial Sector Stability

For Bangladesh's export economy, financial sector stability is a critical competitiveness variable. The NBFI liquidation plan signals the government's commitment to addressing long-standing financial sector weaknesses — but also creates near-term uncertainty:

• 💰 Investor confidence — decisive action can restore confidence in banking system
• 🚧 Short-term disruption — depositors and borrowers of liquidated NBFIs affected
• 💸 Credit availability — NBFI closures may reduce credit for SMEs and consumers
• 🏛️ Sovereign risk — successful resolution supports sovereign credit profile
• 🤝 IMF programme — banking reform is key IMF conditionality

The Tk 2,000 crore liquidation fund represents a significant fiscal commitment — but if executed effectively, it could mark a turning point in Bangladesh's banking sector cleanup. By prioritising individual depositors and demonstrating that the resolution framework works, the BB can rebuild public trust in the financial system and create a more stable foundation for the credit growth needed to support export-oriented industrial expansion in the post-LDC era.