Midas Financing Faces Severe Liquidity Crisis as 54% Loans Classified, Auditor Warns

Dhaka, August 16, 2026 — Struggling non-bank financial institution Midas Financing PLC is facing a severe liquidity crunch to meet depositors' requirements, highlighting an urgent need for adequate liquidity arrangements to restore customer confidence, according to its statutory auditor. The auditor's report for the year ended December 31, 2025, reveals critical financial distress — with over 54 percent of the NBFI's loan portfolio classified as non-performing and negative shareholders' equity of Tk 266.01 crore.

📊 The Financial Distress Numbers

The auditor's report, prepared by AKM Kamrul Islam, managing partner of Islam Aftab Kamrul & Co, Chartered Accountants, highlighted critical financial distress under an “Emphasis of Matter” paragraph:

• 💰 Tk 788.82 crore — total lease, loan, and advance portfolio
• 📉 Tk 432.47 crore — non-performing/classified loans (54%+ of total)
• 📈 Tk 356.35 crore — unclassified loans
• 📉 Tk 335.29 crore — net loss after tax (2025)
• 📉 Tk 46.87 crore — net interest loss (2025)
• 📉 Tk 46.36 crore — total operating loss (2025)
• 📉 Tk 350.07 crore — capital to risk-weighted assets ratio shortfall
• 📉 Tk 266.01 crore — negative shareholders' equity (as of Dec 31, 2025)

🚧 Provision Shortfall and BB Arrangement

To cover potential losses, the Bangladesh Bank mandated a provision shortfall of Tk 25.98 crore against 41 individual lease, loan, and advance accounts, along with Tk 6 crore in other general provisions. Following an appeal by Midas Financing, the central bank issued a letter on June 22, 2023, allowing the NBFI to adjust the provision shortfall over five years starting from 2022.

• 💰 Tk 25.98 crore — provision shortfall against 41 accounts
• 💰 Tk 6 crore — other general provisions
• 📅 June 22, 2023 — BB letter allowing 5-year adjustment
• 📅 Starting from 2022 — five-year adjustment period

🚧 Capital and Operational Erosion

The financial statement highlights significant capital and operational erosion. For 2025, the institution reported:

• 📉 Net interest loss: Tk 46.87 crore — interest income insufficient to cover interest expense
• 📉 Total operating loss: Tk 46.36 crore — operations generating negative returns
• 📉 Net loss after tax: Tk 335.29 crore — massive annual loss
• 📉 CRAR shortfall: Tk 350.07 crore — capital adequacy far below regulatory minimum
• 📉 Negative equity: Tk 266.01 crore — liabilities exceed assets

📜 Compliance Lapse

The auditor also noted a compliance lapse regarding Tk 9.61 lakh presented under unclaimed dividend payables — which contradicts Bangladesh Securities and Exchange Commission (BSEC) directives requiring unclaimed dividends to be reported as a separate line item.

🌐 Strategic Context: NBFI Sector Crisis

Midas Financing's distress is part of a broader NBFI sector crisis in Bangladesh. The Bangladesh Bank has already declared four NBFIs non-viable (Aviva Finance, Fareast Finance, FAS Finance, International Leasing) and is planning to liquidate five NBFIs with Tk 2,000 crore from the government fund. Midas Financing's situation illustrates the depth of the sector's challenges:

• 🏭 4 NBFIs already non-viable — declared by BB in 2026
• 🏭 4 more NBFIs given 3-month window — to regain viability
• 🏭 Midas Financing — 54% NPL ratio, negative equity, massive losses
• 💰 Tk 2,000cr liquidation fund — government allocation for depositor protection
• 👥 Depositor anxiety — liquidity crisis undermines confidence across sector

💰 Why NBFI Sector Health Matters for Export Economy

NBFIs play a critical role in Bangladesh's financial ecosystem — particularly for SMEs, agri-businesses, and consumer finance that may not qualify for commercial bank loans. The sector's distress has indirect but significant implications for the export economy:

• 🌾 SME financing gap — NBFI closures reduce credit for small exporters
• 💰 Trade finance capacity — NBFIs provide alternative trade finance channels
• 👥 Consumer credit — NBFI distress reduces domestic demand for manufactured goods
• 💸 Lease financing — NBFIs finance equipment and machinery for manufacturers
• 🤝 Systemic confidence — NBFI crisis erodes trust in broader financial system

The auditor's report on Midas Financing serves as a microcosm of the broader NBFI sector challenges — connected lending, weak governance, inadequate provisioning, and capital erosion. The Bangladesh Bank's resolution framework (including liquidation for non-viable institutions and recovery windows for borderline cases) represents the necessary structural response. However, the depth of the crisis — as illustrated by Midas's 54% NPL ratio and Tk 335 crore annual loss — suggests that the NBFI sector cleanup will require sustained effort, significant capital, and strong political will to complete.

For Midas Financing specifically, the path forward depends on whether the institution can secure emergency liquidity support to restore depositor confidence while implementing a credible recovery plan. Without such support, the NBFI risks becoming the sixth institution to be declared non-viable — joining the growing list of NBFIs that the BB is planning to resolve through liquidation. The auditor's emphasis on “urgent need for adequate liquidity arrangements” signals that the window for recovery may be closing rapidly. For the broader NBFI sector, the Midas case reinforces the urgency of the BB's ongoing resolution process — and the need for depositors, policymakers, and the financial system to prepare for continued sector consolidation in the coming months.