Bangladesh Bank has decided to appoint administrators at five non-bank financial institutions (NBFIs) that have become effectively non-functional due to years of irregularities, loan defaults, and mismanagement.

The decision was taken at a meeting of the central bank’s board of directors on Tuesday, chaired by Governor Mostakur Rahman, officials confirmed.

The board reviewed the condition of nine financially distressed NBFIs. It decided to dissolve the boards of five institutions and place them under administration, while giving four others three months to demonstrate their ability to recover.

The five institutions set to receive administrators are FAS Finance, Fareast Finance, Aviva Finance, Peoples Leasing, and International Leasing.

The remaining four institutions Bangladesh Industrial Finance Company (BIFC), Premier Leasing & Finance, GSP Finance, and Prime Finance have been given three months to prove they can repay depositors and restore financial stability. Failure to do so could result in resolution or liquidation proceedings.

According to a Bangladesh Bank official, the five institutions earmarked for administration hold around Tk 2,700 crore in deposits belonging to approximately 27,000 individual depositors. After administrators are appointed, the process of returning depositors’ funds will begin, with individual depositors eligible to receive up to Tk 1 million each.

Central bank data show that these institutions are burdened by extremely high non-performing loan (NPL) ratios. As of December 2025, FAS Finance recorded an NPL ratio of 99.99%, International Leasing 99.44%, Fareast Finance 98.50%, Peoples Leasing about 95%, and Aviva Finance 93.93%.

Bangladesh Bank had earlier identified the nine institutions as non-viable due to their inability to repay depositors, severe capital shortfalls, and mounting defaulted loans. Plans to revoke their licenses and initiate liquidation were launched last year but progressed slowly following changes in government and central bank leadership.

Officials estimate that resolving the troubled institutions could cost the government around Tk 9,000 crore, with priority being given to compensating small depositors.

According to central bank figures, the nine distressed NBFIs hold total deposits of Tk 15,370 crore, including Tk 3,525 crore belonging to individual depositors and Tk 11,845 crore from banks and corporate entities.

The largest amount of individual deposits is tied up in Peoples Leasing, at Tk 1,405 crore, followed by Aviva Finance with Tk 809 crore, International Leasing with Tk 645 crore, and Prime Finance with Tk 328 crore.

The move is being taken under provisions of the Finance Company Act, 2023, which allows regulators to revoke licenses if institutions act against depositors’ interests, fail to maintain adequate capital, or lack sufficient assets to meet liabilities.

Bangladesh Bank currently oversees 35 NBFIs, of which 20 have been classified as troubled. The sector’s total outstanding loans stand at Tk 25,808 crore, with Tk 21,462 crore classified as non-performing, resulting in a default rate of 83.16% among the distressed institutions.

Industry observers attribute much of the sector’s crisis to large-scale financial irregularities during previous years, including scandals linked to businessman P.K. Halder and other influential corporate groups.

The central bank hopes the latest intervention will help protect depositors and restore confidence in the country’s non-bank financial sector.