A ray of hope at the end of tunnel

Wahidur Rahman, a retired employee of a private company, made a fixed-term deposit of Tk 40 lakh with the People’s Leasing and Financial Services Limited just a few months before the company shut its door in July 2019.
Rahman, 53, was utterly shocked upon hearing the news of the Non-Bank Financial Institution winding down its operation and tried various ways to get his money back for the last two years but in vain.
“I am very sick now and cannot afford treatment as I deposited my entire savings here,” said Rahman.
The situation of housewife Rahela Akter, who has Tk 8 lakh deposited in the company, is no different to Rahman.
“We are living an inhuman life amid the ongoing COVID-19 pandemic but the looters are happy with our money,” resented Rahela while speaking to The Business Post on Tuesday.
Rahman and Rahela are among around 6,000 individual depositors, who are struggling in their life not being able to recover their money from the ailing NBFI.
After a painful wait for nearly two years, when they rushed to different authorities and held multiple protests, the individual depositors finally saw hope in recent weeks as the government moved to revive the NBFI budging from an initial plan of liquidating it.
The depositors warmly welcomed the government move.
“This is a good initiative by the government to rescue the NBFI,” said Samia Binte Mahbub, coordinator of Small Depositors’ Council. “Now we are optimistic that we will get our hard-earned money back.”
The depositors had been going through a rough patch as none of them could recover a penny in two years since the government moved to liquidate the embattled financial institution.
Samia pointed out that 12 depositors died so far having been unable to finance their treatment and many elderly persons have lost their livelihoods since the liquidation process got underway.
People’s Leasing turns ailing concern
Embezzlement of fund by directors, violation of company rules, massive irregularities in approving loans, lack of internal control and compliance have led the NBFI to the closure of its operation, as per the Bangladesh Bank audit report in 2019.
People’s Leasing and Financial Services Limited was licensed by the central bank as a NBFI on November 24, 1997.
Until 2014, the company was doing well, but gradually its condition started changing, according to PLFSL financial statement.
PLFSL’s net profit was Tk 19.66 crore in 2014 but the company started counting losses from the following year.
Some directors of PLFSL took out Tk 570 crore through irregularities, as per a BB audit report in 2015. The central bank in the year removed five directors for their alleged involvement in the financial scandal.
The then NRB global bank managing director Proshanta Kumar Halder, also known as PK Halder, used his connection in People’s Leasing to get involved in several irregularities and swindled out at least Tk 3,500 crore from it and three other NBFIs.
The NBFI had 9 per cent non-performing loans in 2014, which increased to 34 per cent in 2015. In 2018, the non-performing loan soared to 66 per cent at the NBFI, according to its annual reports.
As of December 2019, the total amount of deposit in PLFSL stood at Tk 2,500 crore. Of the amount, Tk 750 crore came from the individual depositors, as per the audit report of the central bank.
The defaulted loan at the NBFI is Tk 1,900 crore with interest, said the report.
Liquidation process
In 2019, the government decided to liquidate People’s Leasing as it failed to return the depositors’ money.
Liquidation means the closing of a business so that its assets can be sold to pay its debts.
The process of liquidating People’s Leasing was the first such step in Bangladesh’s financial sector.
Following a court order, the central bank appointed Md Asaduzzaman Khan, deputy general manager of its financial institutions department as the liquidator for the NBFI.
Govt backtracks on decision
The initiative to liquidate the PLFSL affected the entire financial institution sector, forcing the government to backtrack on its decision to wind up the NBFI.
Following a writ petition by 201 depositors against liquidating the company, the High Court on June 28 this year formed a new board to lead reform in the scam-hit Non-Bank Financial Institution.
The HC appointed senior Supreme Court lawyer Kamal-Ul Alam as chairman of the board. Former secretary Anwarul Islam Sikder, retired senior district and sessions judge Hasan Shaheed Ferdous, former managing director of Pubali Bank Abdul Halim Chowdhury, Brig Gen (retd) Kazi Taufiqul Islam, FCA Noor-E Khoda Abdul Mobin, FCA Mowla Mohammad, representative of the depositors Nashid Kamal and finance department chairman of North South University Nurul Kabir were made members of the board.
Former managing director of Ansar VDP Unnayan Bank Mohammad Jalaluddin will be the Managing Director of PLFSL.
“The new board will take all necessary measures from loan recovery to finding out eligible investors,” liquidator Ahsanul Karim told The Business Post.
Industry insiders said former People’s Leasing director Alamgir Shamsul Alamin, also the chairman of Shamsul Alamin Group, and two other industry groups are keen to take over the wounded NBFL.
The Bangladesh Bank in February approved the appointment of Howladar Yunus & Co. to assess the company’s actual assets and liabilities following an application from the Shamsul Alamin Group.
The Business Post tried to reach the group’s chairman Shamsul Alamin over the phone but he did not respond.
However, a few months ago, he stated that they were yet to decide on assuming People’s Leasing and Financial Services Limited.
People’s Leasing so far could recover around Tk 37 crore from defaulters since the central bank appointed the liquidator in July 2019, said liquidator Asaduzzaman Khan.
The company is yet to return any fund to its depositors since the liquidation process got underway, he said.