The scale of irregularities in Bangladesh’s non-bank financial institutions (NBFIs) has surpassed even that of the country’s banks, with default loans rising at an alarming rate. According to the latest report from Bangladesh Bank, defaults in the sector increased by nearly Tk 2,500 crore in the first half of 2025 (January–June), pushing total defaulted loans to over Tk 27,500 crore—about 36% of total outstanding loans.The crisis in NBFIs is not new. The sector is still reeling from the scandals linked to PK Halder, who embezzled massive sums from multiple institutions under his control. The institutions associated with him now have some of the highest default rates, while others connected to them are also weighed down by mounting defaults. Data shows that 20 NBFIs currently have default rates between 50% and 99%, rendering them virtually bankrupt.
The fallout has left depositors in distress. Customers are unable to withdraw their savings, and new loan disbursements have come to a near standstill. Although Bangladesh Bank announced a decision a month ago to liquidate nine of the most distressed institutions, the process has made little progress.
As of June 2025, total outstanding loans in the NBFI sector stood at Tk 77,092 crore, of which Tk 27,541 crore were classified as defaults, equivalent to 35.72%. This marked a sharp rise from December 2024, when defaults stood at Tk 25,079 crore, or 33.25% of total loans. In just six months, defaults rose by Tk 2,462 crore.
For years, loan rescheduling and political influence masked the true scale of the crisis. But following political changes, stricter monitoring by Bangladesh Bank has exposed the real picture, eroding public confidence in the sector.
Currently, Bangladesh has 35 NBFIs—22 domestically owned and 13 joint ventures. Last month, Bangladesh Bank issued notices to 20 high-risk institutions, asking why they should not be shut down. Nine of them—including FAS Finance, Bangladesh Industrial Finance Company (BIFC), People’s Leasing, International Leasing, Aviva Finance, Premier Leasing, Fareast Finance, GSP Finance, and Prime Finance—are now under liquidation initiatives, with default rates ranging between 80% and 99%.
Another 13 institutions, including CVC Finance, Bay Leasing, Islamic Finance, Meridian Finance, Haj Finance, National Finance, IIDFC, Uttara Finance, Phoenix Finance, First Finance, Union Capital, and others, are also under close watch, with default rates exceeding 50%.
Analysts warn that the crisis stems from long-standing political interference, weak oversight, and deliberate looting by insiders. Many directors and their associates siphoned off vast sums under the guise of loans. Without urgent reforms, they caution, not only will depositors lose their money, but the entire financial sector risks collapse.
Taufiq Ahmed Chowdhury, former Director General of the Bangladesh Institute of Bank Management (BIBM), said, “The institutions were licensed to serve a purpose that was never fulfilled. Instead, mismanagement and corruption led to massive embezzlement. Non-performing and irregular institutions should be quickly shut down under an exit policy.”
Bangladesh Bank Director and Assistant Spokesperson Md. Shahriar Siddiqui said the decision to close down failing institutions is aimed at protecting depositors’ interests. “The matter is still under review. Once government funds are allocated, the process will begin. Whatever is done will be with depositors’ protection in mind,” he assured.