Bangladesh Bank on Tuesday decided to liquidate five non-bank financial institutions (NBFIs) as they sinks deeper into insolvency, mounting defaults and a prolonged depositor crisis.

BB officials said that the formal liquidation process would begin from July 1.

The decision was taken at a board meeting of the central bank amid growing concerns over the collapse of several financially distressed NBFIs whose operations have virtually become non-viable.

The five institutions selected for liquidation are FAS Finance & Investment Limited, People’s Leasing and Financial Services Limited, International Leasing and Financial Services Limited, Aviva Finance Limited and Fareast Finance & Investment Limited.

The central bank will prepare a liquidation scheme and seek nearly Tk 2,000 crore funds from government to support the process.

Under the proposed mechanism, individual depositors will get priority.

Initially, individual depositors with deposits below Tk 10 lakh will receive full refunds.

Depositors with amounts above Tk 10 lakh are expected to receive payments on a pro-rata basis depending on recoverable assets.

Institutional depositors and shareholders may have to wait longer and will receive payments only if funds remain after settlement under liquidation rules.

Data from Bangladesh Bank showed that nearly all loans of the five NBFIs had already turned defaulted by December 2025.

FAS Finance disbursed Tk 1,810 crore in loans, all of which became defaulted.

People’s Leasing had Tk 1,024 crore default loans against total loans of Tk 1,050 crore.

International Leasing recorded Tk 4,087 crore in NPLs against Tk 4,110 crore disbursed loans, while Fareast Finance had Tk 856 crore classified loans out of Tk 869 crore.

Aviva Finance reported Tk 2,928 crore default loans against Tk 3,116 crore total loans.

The move follows an earlier Bangladesh Bank initiative in May 2025 to liquidate nine NBFIs.

Later, the regulator excluded Bangladesh Industrial Finance Company, GSP Finance Company (Bangladesh) and Prime Finance & Investment from immediate liquidation after granting them more time.

Premier Leasing & Finance Limited is now also removed from the process.

Bangladesh Bank data showed that classified loans of 30 NBFIs stood at Tk 23,264 crore against total outstanding loans of Tk 56,974 crore in December 2025.

Earlier, the sector’s default loans stood at Tk 25,089 crore, or 33.25 per cent of total loans, in December 2024.

The central bank’s Financial Stability Report 2024 found that only nine of the country’s 35 NBFIs were financially sound, while 21 were categorised as weak institutions.

Data also showed that 20 NBFIs had default loan ratios above 50 per cent.

Financial sector experts blamed years of reckless lending, political influence, weak governance and poor regulatory oversight for the collapse of the sector.

Thousands of depositors, including retirees and middle-income families, have been unable to withdraw their savings from several NBFIs for years and repeatedly staged demonstrations demanding the return of their money.