Central bank seeks Tk 2,707 crore to return depositors' money from nine troubled financial institutions

Bangladesh Bank has sought Tk 2,707 crore from the government to return the money of depositors of nine troubled non-bank financial institutions. The central bank wrote to the finance ministry on November 3 seeking the funds. Earlier, on October 27, the central bank's board decided at a meeting to seek this money to return depositors' funds.

The institutions whose customers' money is to be returned are International Leasing, Aviva Finance, FAS Finance, Fareast Finance, Peoples Leasing, Prime Finance, GSP Finance, Bangladesh Industrial Finance Company (BIFC) and Premier Leasing. Depositors have kept money in these institutions and have not been able to get it back for a long time.

Bangladesh Bank told the finance ministry that, of the nine institutions, about Tk 1,500 crore would be needed urgently to return the money of depositors of International Leasing, Aviva Finance, FAS Finance and Fareast Finance. About Tk 1,257 crore more would be needed for the remaining five institutions.

In the letter, Bangladesh Bank said that under this initiative, deposits of up to Tk 10 lakh in these institutions would be returned in full.

According to Bangladesh Bank sources, a liquidation case concerning Peoples Leasing is ongoing among the nine institutions. International Leasing, Aviva Finance, FAS Finance and Fareast Finance have been brought under resolution. Bangladesh Bank has appointed administrators and associate administrators in these institutions.

Apart from these, the central bank has given Prime Finance, GSP Finance, BIFC and Premier Leasing three months. Within this period, these institutions must prove their business viability.

According to Bangladesh Bank's calculations, Tk 1,167 crore will be needed to return the money of individual depositors of the four institutions under resolution. In addition, about Tk 190 crore will be needed for provident fund and employee welfare fund money, Tk 42 crore for trust funds and Tk 50 crore for cooperative funds.

Among the four institutions, the most money will be needed for the depositors of Aviva Finance. Tk 745 crore has been sought for that institution. Tk 550 crore has been sought for International Leasing, Tk 85 crore for FAS Finance and Tk 69 crore for Fareast Finance.

Returning the money of the five institutions outside the resolution process will take about Tk 1,257 crore. Of this, Tk 712 crore will be needed for Peoples Leasing. However, as the liquidation case of Peoples Leasing is ongoing, no allocation is being sought for the institution right now.

Among the remaining four institutions, Tk 377 crore will be needed for Prime Finance, Tk 59 crore for GSP Finance, Tk 58 crore for Premier Leasing and Tk 52 crore for BIFC, Bangladesh Bank said.

Although Bangladesh Bank has written to the finance division of the finance ministry seeking the money, the government has not yet taken any decision on the matter. A senior official of the finance division told Prothom Alo yesterday that banks are the mainstream. Financial institutions come next in importance. Yet bank depositors will get back Tk 2 lakh while investors in financial institutions will get Tk 10 lakh each. That is unfair.

Asked about it, Bangladesh Bank spokesperson and executive director Arif Hossain Khan told Prothom Alo yesterday that Bangladesh Bank has informed the government about the situation of the financial institutions, the plight of investors and what needs to be done. The government will now decide on the matter.