Individual Depositors of Four Financial Institutions to Get Up to Tk 50 Lakh
Individual depositors of four non-bank financial institutions (NBFIs) undergoing closure will initially receive up to Tk 50 lakh of their principal deposits under a scheme prepared by Bangladesh Bank. Depositors with larger amounts will receive their money after a specified deduction. The decision was taken at a meeting of the central bank’s board of directors on Thursday, chaired by Bangladesh Bank Governor Mostaqur Rahman.
According to meeting sources, individual depositors with deposits of up to Tk 50 lakh in the four institutions will receive their full principal. Those with larger deposits will receive a reduced amount. Depositors with up to Tk 1 crore will receive a maximum of Tk 60 lakh, while those with deposits between Tk 1 crore and Tk 1.5 crore will receive Tk 80 lakh. Depositors with Tk 1.5 crore to Tk 2 crore will receive Tk 1.05 crore, while those with deposits exceeding Tk 2 crore will receive Tk 1.25 crore.
Four NBFIs facing closure
The four financial institutions are Aviva Finance, Fareast Finance, FAS Finance and International Leasing. On August 9, Bangladesh Bank dissolved the boards of directors of the four institutions and declared the posts of their managing directors (MDs) vacant. Subsequently, the central bank appointed administrators to the institutions and assigned two additional Bangladesh Bank officials to each to assist them.
The four institutions have default loan rates ranging from 93 percent to nearly 100 percent, according to sources. The closure process was initiated due to their high default rates. Their combined deposits amount to Tk 12,483 crore, including Tk 3,012 crore at International Leasing, Tk 5,368 crore at Aviva Finance, Tk 1,246 crore at FAS Finance and Tk 449 crore at Fareast Finance.
In May last year, Bangladesh Bank initiated steps to cancel the registration certificates or licences of 20 NBFIs that had failed to return customers’ deposits. The institutions were asked to explain why their licences should not be cancelled. Nine of the 20 were initially selected for closure after their responses were deemed unsatisfactory. Five were ultimately selected for closure. A final decision on People’s Leasing has yet to be made due to legal complications surrounding ongoing cases.
The remaining four institutions were given three months to recover. If they fail to improve their financial condition within that period, they will also face closure.
The four institutions given time to recover are Prime Finance and Investment Ltd, GSP Finance Company (Bangladesh) Ltd, Bangladesh Industrial Finance Company Ltd (BIFC) and Premier Leasing and Finance Ltd.
