Defaulted loans at the country’s non-bank financial institutions (NBFIs) have surged to a record 37 percent, highlighting the sector’s fragile condition.
As of September last year, 35 NBFIs held Tk 29,408.66 crore in bad loans, equivalent to 37.11 percent of their total disbursed loans of Tk 79,251.11 crore, according to Bangladesh Bank (BB) data.
A year earlier, in September 2024, the sector’s non-performing loan ratio stood at 35.52 percent.
Industry insiders attribute the rise in bad loans to “the legacy of the massive irregularities and scams that took place seven to eight years ago”.
Referring to a Bangladesh Bank probe, they said that PK Halder, the former managing director of NRB Global Bank (later renamed Global Islami Bank), defrauded at least Tk 3,500 crore from four NBFIs.
The affected institutions are People’s Leasing, International Leasing, FAS Finance, and Bangladesh Industrial Finance Company Limited (BIFC). As a result, these four non-banks became ailing, with over 90 percent of their loans turning bad.
Industry insiders said the central bank’s inadequate supervision is to blame for the current state of the NBFI sector. Many non-banks are now unable to repay depositors because of widespread irregularities and scams.
Amid this situation, the central bank is planning to liquidate nine ailing companies.
These are FAS Finance, Bangladesh Industrial Finance Company, Premier Leasing, Fareast Finance, GSP Finance, Prime Finance, Aviva Finance, People’s Leasing, and International Leasing.
The government has pledged Tk 5,000 crore to repay depositors of these NBFIs.
A senior central bank official said administrators are expected to be appointed to these NBFIs soon.
Industry sources said some banks and NBFIs have fallen victim to an “unholy nexus,” which they described as a serious threat to the integrity of the overall financial system.
Additionally, several other NBFIs have been infiltrated by unscrupulous investors who exploited their positions as chairpersons and directors for personal gain, they added.
