Individual and institutional depositors are rushing to the People’s Leasing and Financial Services (PLFS) headquarters at Motijheel every day to get back the money they kept with the financial institution as fixed deposit receipts.
They, however, are neither getting their money back nor any assurance from the financially crippled PLFS management, as the organization’s financial health deteriorated badly in recent times because of its loan irregularities.
On Jun 27, the Ministry of Finance approved a proposal of Bangladesh Bank on liquidating the PLSF.
"If the liquidation goes through, this will mark the first liquidation of a financial institution in Bangladesh," a senior central bank official said.
On Tuesday (Jul 9), during a visit to People’s Leasing headquarters at Motijheel in the capital, many depositors were seen crowding the office premises to draw their deposits but their applications for getting back their hard-earned money were turned down.
PLFS Managing Director and CEO Sami Huda was not present at the office on the day. Only four to five officials of the company were seen at their desks.
A recovery officer of PLSF, requesting anonymity, said: “We are not getting salary for two months due to fragile financial condition of PLFS. As the financial health of PLSF deteriorated, our personal and family life are now being jeopardized.”
Roksana Akter (not real name), a depositor of PLSF, said: “I am totally shocked when I came to know about the bad financial situation of this company.”
One year ago, she deposited Tk 600,000 with PLSF.
“I have saved the deposited money for long. What I will do now, as the PLSF officials are not letting me encash the FDR now," a sobbing Roksana said.
Robiul Islam (not real name) was waiting in the guest room at People’s Leasing office with a gloomy face.
He said: “I deposited Tk 1 million with PLSF for one year tenure on Aug 12, 2018. The deposited money will mature next month. But I apprehend they will not pay back my money like many other depositors, given their financial inability. It is very painful to me.”
Not only Roksana Akter and Robiul Islam, many depositors were seen expressing their utter frustration because they were not getting their money back from the financial institution in question.
Managing Director and CEO of the company Sami Huda could not be reached over mobile phone also.
If the liquidation goes through -- in line with the Financial Institutions Act, 1993 , PLFS’ operations will be closed permanently and the government will take actions to settle liabilities by selling off its assets. But the central bank, as the regulator, has to take approval from the High Court before liquidation.
At the end of September, 2018, the total amount of deposits of PLSF stood at Tk 20.86 billion. But they do not have any cash to run daily activities. The total amount of outstanding loans stood at Tk 11.31 billion. Their defaulted loans stood at Tk 7.48 billion, which was 66.14% of the total loans, according to the Bangladesh Bank data.
Due to the serious of losses, the listed PLSF has been failing to announce any dividend since 2014.
A total of 67.48% of its shares are in the hands of general shareholders, 23.11% shares for sponsors and directors. 8.77% shares for institutional investors and 1.19% shares of foreign investors.
According to Bangladesh Bank source, the central bank receives 10-15 complaints every day on non-payment of depositors’ money from the NBFIs’ clients.
In April, the central bank held a meeting with the ailing non-banking financial institution. It is likely to formulate a bailout plan for those non-bank financial institutions lacking capacity to return clients’ money, sources said.