B Mirror Report: The Bangladesh Bank’s board has given preliminary approval to shut down or liquidate five non-bank financial institutions (NBFIs), with the process expected to begin in July after an assurance of budgetary support in the next fiscal year, officials said.

The decision was taken at a board meeting on Tuesday, chaired by Governor Mostakur Rahman.

The institutions marked for closure are FAS Finance, Fareast Finance, Aviva Finance, Peoples Leasing, and International Leasing.

Officials said the entities have accumulated non-performing loan ratios ranging from 93 per cent to nearly 100 per cent, severely affecting their ability to repay depositors over the years.

A senior central bank official said the institutions will be resolved under the Bank Resolution Act, under which Bangladesh Bank will appoint administrators and deploy additional officials to manage the liquidation process. The firms will also be declared non-operational as part of the procedure.

The official added that around Tk 5,000 crore would be required to repay individual depositors of the affected institutions. The governor reportedly informed the meeting that the government has pledged to allocate necessary funds in the upcoming budget.

Under the resolution framework, assets of the institutions will be sold to settle liabilities, while steps will be taken to ensure repayment to creditors.

Earlier, Bangladesh Bank issued notices to 20 struggling NBFIs asking why they should not be shut down due to high default loans and failure to repay deposits. Following review, nine institutions were initially considered for closure, but the list was later reduced, with several firms removed from the process.

According to central bank data, default loan ratios stood at 99.99 per cent for FAS Finance, 98.50 per cent for Fareast Finance, 93.93 per cent for Aviva Finance, about 95 per cent for Peoples Leasing, and 99.44 per cent for International Leasing as of December.

Sector insiders said governance failures and financial irregularities over previous years led to the sharp rise in non-performing loans, severely weakening the sector’s stability.