Financial stocks jump after cenbank offers four NBFIs final reprieve

Infographics: TBS

Shares of eight financially troubled non-bank financial institutions (NBFIs) rallied today (2 July) after Bangladesh Bank announced plans to liquidate five non-viable institutions while giving four others a final three months to restore their financial health.

Market participants said investors welcomed the central bank's long-awaited move to address the prolonged crisis in the NBFI sector. The decision provided greater regulatory clarity, boosting confidence not only in the four institutions given a final chance to recover but also in several other financially distressed companies.

Among the institutions granted the three-month extension, shares of Prime Finance rose 10% to close at Tk3.30, Bangladesh Industrial Finance Company (BIFC) gained 9.52% to Tk4.60, GSP Finance advanced 8.82% to Tk3.70, and Premier Leasing climbed 8.70% to Tk2.50.

Shares of institutions marked for liquidation also posted strong gains. People's Leasing recorded the day's biggest rise, climbing 16.67% to Tk1.40. Fareast Finance and International Leasing both gained 8.33% to Tk1.30, while First Finance, which was not included in either the liquidation or revival list, rose 10% to Tk4.40.

According to market analysts, although liquidation would normally be viewed as negative, investors interpreted the announcement as the start of a structured resolution process for the troubled sector. 

For the first time, Bangladesh Bank has clearly identified which institutions still have a chance of recovery and which have reached the stage of liquidation.

Analysts also said the proposed depositor protection fund, mandatory forensic audits and the clearly defined revival framework were positive signals. 

However, they cautioned that today's sharp share price gains were also driven by short-term speculative trading rather than any immediate improvement in the companies' financial fundamentals.

Four institutions remain under financial strain

Meanwhile, all four NBFIs that received the extension continue to report losses.

Prime Finance and Investment Limited posted a loss per share (LPS) of Tk2.85 during the January-September 2023 period and has yet to return to profitability.

GSP Finance Company (Bangladesh) Limited reported an LPS of Tk5.22 for the January-September 2025 period, reflecting its continued financial difficulties.

Bangladesh Industrial Finance Company Limited (BIFC) declared no dividend for 2025 and reported an LPS of Tk7.38, the highest among the four institutions.

Premier Leasing & Finance Limited posted an LPS of Tk4.67 during the January-September 2025 period, underscoring its continuing financial challenges.

Among the institutions set to be liquidated, People's Leasing also recommended no dividend for 2025. The company reported an annual LPS of Tk12.81. During the January-March quarter of 2026, its LPS stood at Tk3.39, compared with Tk3.45 in the same period a year earlier.

Bangladesh Bank's decision

At a recent board meeting, Bangladesh Bank reviewed the Financial Viability Reports of nine distressed NBFIs under the Bank Resolution Act, 2026.

Based on the assessment, the central bank decided to liquidate People's Leasing and Financial Services Limited, International Leasing and Financial Services Limited, Aviva Finance Company Limited, FAS Finance and Investment Limited, and Fareast Finance and Investment Limited.

Prime Finance and Investment Limited, GSP Finance Company (Bangladesh) Limited, Bangladesh Industrial Finance Company Limited, and Premier Leasing and Finance Limited have been given a final three months to restore their financial viability.

To avoid liquidation, the four institutions must inject fresh capital through sponsor shareholders, sell assets, recover defaulted loans, improve liquidity and meet other conditions set by Bangladesh Bank. 

Failure to meet any of these conditions within the stipulated period will trigger immediate resolution or liquidation proceedings.

Special fund to protect depositors

Regarding the liquidation process, Bangladesh Bank said protecting depositors would remain the top priority throughout the proceedings. To facilitate repayments, the government and the central bank have decided to establish a special fund.

According to Bangladesh Bank officials, the five institutions hold about Tk2,700 crore in deposits belonging to around 27,000 depositors. Once administrators are appointed, each depositor will initially receive up to Tk10 lakh under the repayment plan.

Before repayments begin, each institution will undergo a mandatory forensic audit by a reputed audit firm. The audits will identify those responsible for financial irregularities, and legal action will be taken against anyone found guilty.

Bad loans close to 100%

Bangladesh Bank's latest Financial Stability Report shows that the five institutions selected for liquidation have some of the highest non-performing loan (NPL) ratios in the country's financial sector.

As of December last year, FAS Finance reported an NPL ratio of 99.99%, followed by International Leasing at 99.44%, Fareast Finance at 98.50%, People's Leasing at nearly 95%, and Aviva Finance at 93.93%.

The central bank believes these exceptionally high levels of defaulted loans have left the institutions unable to issue new loans, repay depositors or continue normal business operations.

Among the five institutions, Aviva Finance was chaired by controversial businessman Saiful Alam, while the other four were controlled by former financier Prashanta Kumar (PK) Halder, who has been accused of masterminding one of Bangladesh's biggest financial scandals.

Bangladesh Bank issued notices to 20 NBFIs in May last year over high default loans and their failure to repay depositors. After reviewing their recovery plans, the central bank concluded that nine institutions had failed to present credible turnaround strategies. 

The latest decision marks the first use of the Bank Resolution Act, 2026, to resolve and liquidate distressed NBFIs.