The Bangladesh Bank has moved the High Court for liquidation of People’s Leasing as the organization’s financial health deteriorated badly in recent times because of loan irregularities.
On Sunday (Jul 14), its counsels filed a petition, following which the court ordered to freeze all bank accounts of former directors of People's Leasing and Financial Services (PLFS), who were appointed before 2015.
The bench of Justice Muhammad Khurshid Alam Sarkar passed the order after hearing a petition filed by the central bank seeking liquidation as per the Financial Institutions Act, 1993.
Barrister Tanjib-Ul-Alom along with Kazi Ershadul Alam stood for the petition.
Earlier, on Jun 27, the finance ministry instructed the central bank to close the NBFI for its failure to improve its conditions.
"If the liquidation goes through, this will be the first liquidation of a financial institution in Bangladesh," a senior central bank official said.
BB officials said that the NBFI failed to repay the depositors’ money despite maturity of the funds.
The NBFI’s problems came to light in 2013-14, when some of its directors made off with more than Tk 10 billion by way of submitting fake documents, he added.
In 2015, the central bank had removed five directors, Khabir Uddin Miah, Motiur Rahman, Arafin Shamsul Alamin, Humaira Alamin and Nargis Alamin, for their involvement in the financial scandal.
On Jul 10, in a press briefing, Bangladesh Bank (BB) assured that the depositors would get back their money as assets of the company was still bigger than its liabilities.
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 percent of the total loans, according to Bangladesh Bank.
Due to the big losses, the listed PLSF failed to announce any dividend since 2014.
Of the total PLFS shares, 67.48 percent are held by general shareholders, 23.11 percent by sponsors and directors, 8.77 percent by institutional investors and 1.19 percent by foreign investors