B Mirror Report: Bangladesh Bank Governor Md. Mostakur Rahman has expressed that the required funds to liquidate six troubled non-bank financial institutions (NBFIs) will be released by the Ministry of Finance in July this year.
The governor made the remarks during a meeting with senior journalists at the central bank on Sunday. “We expect to receive the necessary funds from the Ministry of Finance in July to proceed with the liquidation of six financial institutions,” he said.
A senior Bangladesh Bank official told The Business Standard that the Finance Division has planned to disburse the funds in two phases. In the first phase, Tk 2,600 crore will be released, followed by another Tk 3,000 crore by June.
“Once the first tranche is received, administrators will be appointed to the concerned institutions. Their primary task will be to repay depositors, particularly individuals. After that, applications will be filed in court to begin the liquidation process,” the official added.
On January 27, the central bank’s board decided to liquidate six NBFIs and allowed three others a grace period of three to six months to improve their conditions.
The six institutions set for liquidation are FAS Finance, Premier Leasing, Fareast Finance, Aviva Finance, Peoples Leasing, and International Leasing.
The three institutions granted time are Bangladesh Industrial Finance Company, GSP Finance Company, and Prime Finance & Investment Limited.
Currently, there are 35 NBFIs in the country, of which 20 have been identified as weak by the central bank.
These 20 institutions have total outstanding loans of Tk 25,808 crore, with Tk 21,462 crore around 83.16 percent classified as defaulted. In contrast, the value of their collateral stands at only Tk 6,899 crore.
Meanwhile, the remaining 15 relatively healthy institutions reported a much lower default loan rate of 7.31 percent. Last year, they posted a combined profit of Tk 1,465 crore and maintained a capital surplus of Tk 6,189 crore.
Deposits in the 20 weak institutions total Tk 22,127 crore, including approximately Tk 4,971 crore in net individual deposits. Bangladesh Bank estimates that this amount may be required initially to begin the liquidation and restructuring process.
