Amidst the massive liquidation process in the country's non-bank financial institutions (NBFI) sector, three institutions have been temporarily saved from closure.
Bangladesh Bank has decided to give GSP Finance, Prime Finance and Bangladesh Industrial Finance Company (BIFC) 3-6 months to improve their financial indicators.
The decision was taken at a board meeting of Bangladesh Bank on Tuesday (January 27).
The meeting was presided over by governor Ahsan H Mansur. Bangladesh Bank Executive Director and Spokesperson Arif Hossain Khan confirmed the matter.
According to Bangladesh Bank sources, in May last year, 20 NBFIs were given show-cause notices as to why they would not be closed or liquidated due to their failure to repay high defaulted loans and deposits.
The central bank took the initiative to liquidate nine institutions as their recovery or turnaround action plans were not satisfactory.
These 9 NBFIs were Fast Finance, Bangladesh Industrial Finance Company (BIFC), Premier Leasing, Fareast Finance, GSP Finance, Prime Finance, Aviva Finance, People's Leasing and International Leasing.
Due to long-standing irregularities and poor management, the defaulted loans of these institutions have reached 75% to 98%.
However, after the hearing, it was decided not to liquidate them for the time being, considering the action plans presented by GSP Finance, Prime Finance, and BIFC partially implementable. The board of the central bank approved this decision.
A senior Bangladesh Bank official, who did not want to be named, said that during the hearing, the institutions concerned presented various arguments and plans to overcome their financial crisis.
Based on this, the three institutions have been given an opportunity to show improvement in financial indicators within a specified period.
According to those involved in the sector, the crisis in the NBFI sector has reached its peak due to widespread irregularities and scandals during the previous government.
In particular, in the PK Halder-related scandal, there are allegations of embezzlement of at least Tk3,500 crore from People's Leasing, International Leasing, Fast Finance, and BIFC.
Meanwhile, the governor of Bangladesh Bank has assured the individual depositors of the 9 ailing NBFIs that are on the verge of liquidation.
In a recent press conference, he said that the depositors will get their principal back before Ramadan in February. However, no interest will be paid.
According to central bank sources, the government has verbally approved about Tk5,000 crore to return the depositors' money. The next decision will be taken on whether the shareholders will get any money or not by evaluating the assets of the institutions concerned.
