Bangladesh Bank is finally set to take tough measures to restructure the crisis-ridden non-bank financial institutions (NBFI) sector, which has been devastated by weak governance and the complexity of defaulted loans. All non-bank financial institutions (NBFIs) in the country have been brought under the Bank Resolution Ordinance. Bangladesh Bank disclosed this information through a circular last Sunday. The regulator has already identified nine distressed NBFIs and decided to liquidate or shut them down.

Bangladesh Bank Governor Ahsan H. Mansur recently said at an event that individual depositors of these institutions will receive their full money back. At present, the process of merging five Islamic banks is underway under the Bank Resolution Ordinance.

According to the Bangladesh Bank circular, in order to maintain stability in the financial sector and to protect public interest in the businesses and activities conducted by NBFIs, the Bank Resolution Ordinance along with necessary amendments will be applicable to all NBFIs.

Meanwhile, at the latest meeting of the Bangladesh Bank Board of Directors, approval was given to shut down nine non-bank financial institutions. These institutions are: FAS Finance, Bangladesh Industrial Finance Company, Premier Leasing, Fareast Finance, GSP Finance, Prime Finance, Aviva Finance, People’s Leasing, and International Leasing. These nine institutions account for 52 percent of the total defaulted loans in the financial institutions sector. By the end of last year, the amount of defaulted loans at these institutions stood at Tk 25,089 crore.

According to central bank data, a total of Tk 15,370 crore in deposits belonging to both individual and institutional depositors—is stuck in these nine financial institutions. Of this amount, Tk 3,525 crore belongs to individual depositors, while Tk 11,845 crore belongs to banks and corporate depositors.

People’s Leasing tops the list in terms of stuck individual deposits, with Tk 1,405 crore blocked at the institution. In addition, Tk 809 crore is stuck at Aviva Finance, Tk 645 crore at International Leasing, Tk 328 crore at Prime Finance, and Tk 105 crore at FAS Finance.