ILFSL to seek low-cost fund to repay depositors

Scam-hit International Leasing and Financial Services Limited (ILFSL) is going to seek a long-term, low-cost fund from the finance ministry and the Bangladesh Bank to repay depositors’ money.

“Now we need such a fund to pay back depositors and revive the company as it is facing a financial crisis,” said Md Mashiur Rahman, managing director (current charge) of ILFSL.

This was still at the planning stage and the ILFSL board would submit a proposal to the finance ministry and the central bank next month, he said.

He also told The Business Post the fund’s amount was yet to be finalised. “The fund may come with a one-year grace period.”

ILFSL has recovered Tk 116 crore from defaulters since Nazrul Islam Khan’s appointment to the board. The High Court on March 22 last year appointed Nazrul, a retired senior secretary of the government, as a new independent director and chairman of the company.

The court on July 6 this year also appointed five independent directors to the ailing non-bank financial institution (NBFI) in a bid to revive it.

The NBFI has already paid back 1,892 depositors on humanitarian grounds, as per its officials.

The company’s total depositors stood at 4,019 till December last year. Of them, 3,071 were individual depositors, and 948 corporate depositors.

The NBFI’s total deposits stood at Tk 2,767.66 crore in December 2019, and Tk 543.67 crore of that was from individual depositors.

“Depending on cash flow, we are now paying back depositors who are physically ill and suffering from various diseases,” said Mashiur.

He said ILFSL was paying back depositors as soon as it was recovering money from defaulters.

“It is not very easy to recover loans from defaulters,” said Mashiur. He said ILFSL had taken initiatives to sell some mortgaged assets of borrowers but “it is time-consuming”.

As per the central bank data, the total outstanding loans of the company stood at Tk 4,022 crore in March this year, and Tk 2,999 crore (74.56 per cent) of that became default. The number of defaulters stood at 154 in December 2020.

Nazrul told The Business Post company officials were facing various difficulties in recovering loans from defaulters. 

“It was the worst experience when a borrower filed a lawsuit against us as we tried to recover loans from him,” he explained.

He said the company was operating with the profit of its two subsidiaries – International Leasing Securities Limited and IL Capital Limited – as the latter had already recovered from the shock.

Syed Abu Naser Bakhtear Ahmed, former managing director and CEO of Agrani Bank, is one of the independent directors of ILFSL appointed by the High Court on July 6 this year.

He told The Business Post the new board was emphasising recovery from defaulters and paying back depositors to restore their confidence.

“We are trying our best to recover default loans but the expected results have not been achieved,” he pointed out.

The NBFI had planned to start afresh after restoring depositors’ confidence, he added.

Dissatisfaction among ILFSL officials

The company has 83 permanent officials and 11 contractual ones. It has four branches, including the head office in the capital’s Purana Paltan. The three other branches are in Chattogram, Uttara, and Sylhet.

The scam-hit NBFI has already shut its Dhanmondi branch due to the financial crisis.

A number of officials of the company have expressed dissatisfaction with their jobs as they are not getting any financial benefits, except for salaries. Even salary payments are often delayed.

Besides, the employees are unable to change their jobs due to the bad image of ILFSL.

An official of the company, who has been working there for at least seven years, told The Business Post he had tried to switch his job but failed as ILFSL is riddled with huge irregularities and scams. 

What happened at ILFSL?

In 1996, ILFSL registered as a public limited company and was licenced by the Bangladesh Bank as an NBFI on February 19 that year.

It was doing well till 2015, but its condition started worsening since then, according to its financial statement.

The company’s net profit was Tk 12.25 crore in 2015 and Tk 11.42 crore the following year. But in 2019, it went into the red.

By the end of that year, its loss stood at Tk 41.42 crore.

Embezzlements by directors and shareholders, violations of company rules, massive irregularities in approving loans, and a lack of internal control and compliance have turned ILFSL into an ailing NBFI, as per officials of the central bank.

A Bangladesh Bank special investigation found that Tk 1,596.14 crore was transferred from ILFSL between 2015 and 2019 as loans. This was done violating the company rules and regulations through 48 accounts of various companies where a number of the NBFI’s directors and shareholders had stakes.

Fraudulent businessman Proshanta Kumar Halder, who controlled the company’s majority shares after buying those under the names of different individuals, including his family members, was directly involved in the embezzlements, according to the central bank probe report.

On January 22 last year, after hearing a writ petition, the High Court removed MA Hashem as the ILFSL chairman and replaced him with former Bangladesh Bank deputy governor Khondkar Ibrahim Khaled in an effort to revive the NBFI.

But Khaled resigned after a little over one month. The High Court then appointed Nazrul.