Bangladesh’s NBFI Sector Struggles Under PK Halder Legacy

Bangladesh’s non-bank financial institutions (NBFIs) remain under severe stress, still grappling with the fallout of Prashanta Kumar (PK) Halder’s financial misconduct that hollowed out parts of the industry.

For six straight years, the sector has posted losses. By the end of 2024, accumulated deficits had surged to Tk 35.55 billion (3,555 crore), almost double the Tk 18.03 billion reported the previous year.

How the Crisis Began

The downward spiral dates back to 2014, when PK Halder — then managing director of one NBFI — quietly extended his influence over four others. Using these firms, he drained vast sums under the guise of loans, echoing scandals linked to the S Alam group with whom he maintained close ties.

Those institutions eventually collapsed, dragging much of the sector down with them.

The Current Picture

Bangladesh Bank reports that 35 NBFIs are active today — 22 locally owned and 13 joint ventures. But 20 have been issued notices over excessive defaults and severe liquidity shortages. While 11 have submitted recovery plans, nine are heading toward liquidation, with both the central bank and the government backing the move.

To protect savers, the central bank is creating a depositors’ protection fund for clients of the failed entities.

Sector-Wide Losses

Default rates have climbed sharply — from 7.9% of total loans in 2018 to nearly 34% by 2024. Effectively, one out of every three loans is in default.

The last profitable year was 2018, when the industry earned Tk 8.3 billion. Since then, losses have mounted year after year, reaching Tk 35.55 billion in 2024.

Financial reports show staggering individual losses:

• International Leasing: Tk 8.63 billion (863 crore)

• BD Finance: Tk 7.83 billion (783 crore)

• Bay Leasing: Tk 4.38 billion (438 crore)

• IIDFC: Tk 1.58 billion (158 crore)

• Hajj Finance: Tk 1.32 billion (132 crore)

Smaller firms including CVC, Midas, Meridian, and National Finance posted losses of Tk 300–700 million each.

Institutions Facing Closure

The central bank has issued notices to 20 NBFIs, among them: CVC Finance, Bay Leasing, Islamic Finance, Meridian Finance, GSP Finance, Hajj Finance, National Finance, IIDFC, Premier Leasing, Prime Finance, Uttara Finance, Aviva Finance, Phoenix Finance, Peoples Leasing, First Finance, Union Capital, International Leasing, BIFC, Fareast Finance, and FAS Finance.

Nine of these — including Peoples Leasing, International Leasing, Aviva Finance, GSP Finance, and FAS Finance — are marked for liquidation.

Bright Spots Amid the Gloom

Some firms have avoided collapse and continue to perform strongly. IDLC Finance, IPDC Finance, LankaBangla Finance, DBH Finance, United Finance, National Housing, and EDCL remain profitable, partly cushioning the sector-wide losses.

IDLC Finance led the way with Tk 2 billion in profits in 2024, maintaining its dominance in SME and sustainable financing. It has also expanded its depositor base through a partnership with bKash, bringing in 1.5 million new customers.

Other profitable firms include:

• IPDC Finance: Tk 360 million

• United Finance: Tk 210 million

• DBH Finance: Tk 1.01 billion

• IDCOL: Tk 1.71 billion, driven by investments in renewable energy and PPP projects.

Anatomy of the Collapse

Documents show that before and after the 2014 general election, control of at least four NBFIs shifted abruptly to PK Halder through shell firms and stock acquisitions. Once in control, he orchestrated fictitious loan schemes, diverted funds abroad, and even established overseas companies.

Institutions under his grip — International Leasing, Peoples Leasing, FAS Finance, and BIFC — are now insolvent, unable to repay depositors.

Halder also abused positions at Reliance Finance (now Aviva) and NRB Global Bank (now Global Islami Bank), further draining resources. Insiders allege that regulators at Bangladesh Bank and the Securities and Exchange Commission failed to act, enabling the fraud.

By mid-2019, as deposit defaults mounted, Halder fled to India. Arrested there later, he served a jail term before reportedly moving to another country.

Expert Opinion

Mominul Islam, former chairman of the Bangladesh Leasing and Finance Companies Association (BLFCA), blamed regulatory negligence for the sector’s collapse.

“Intervention came too late, leaving most institutions in ruins. Consolidation and capital support are essential to restore confidence. With proper reforms, the sector could still play a key role in housing finance and long-term investment, especially through bonds — but laws must change to allow this,” he said.

He added: “The credibility of well-run firms is being unfairly damaged. In India, NBFIs are vital to economic growth. Bangladesh needs decisive steps now if its NBFIs are to play a similar role.”