Irregularities and corruption during the tenure of the ousted Awami League government have pushed the non-bank financial institution (NBFI) sector into a deep crisis.
Many institutions are now unable to return depositors’ money. In this situation, Bangladesh Bank has initially decided to close nine weak NBFIs. Widespread embezzlement, capital shortfalls, and soaring default loans have severely eroded public and institutional confidence in the sector.
According to a recent report by Bangladesh Bank, over Tk 16,367 crore in institutional fixed deposits (FDRs) remain stuck in around 20 non-bank financial institutions. Among them, nine have been identified as extremely weak. These include FAS Finance, Fareast Finance, International Leasing, People’s Leasing, and Premier Leasing, where nearly all loans have turned defaulted. The government is expected to lose about Tk 9,000 crore due to the liquidation of these institutions.
Industry insiders say political influence, commission-based deals, and the lure of high interest rates led to large sums being deposited in these troubled institutions. Former Managing Director of Social Islami Bank, Shafiqul Rahman, acknowledged that corruption and political interference are the root causes of the crisis. He pointed to the roles of former Farmers Bank Chairman Dr. Muhiuddin Khan Alamgir and the S. Alam Group, who allegedly exerted significant influence over financial operations during that period.
Bangladesh Bank spokesperson Arif Hossain Khan stated that where institutions choose to keep their deposits is part of their business policy, but the real issue is corruption. Without tackling it, the sector cannot recover. Economists argue that the absence of clear guidelines on where FDRs can be placed has worsened the situation. They emphasize that without transparency and accountability, halting the collapse of the NBFI sector will remain an uphill battle.