Due to widespread looting in the financial sector, several banks are now almost bankrupt. It can’t be fixed even with various policy support. The situation of the country’s non-banking financial institutions is worse. The institutions were looted in collusion between the owners, officials and central bank officials.
In 2021, the High Court ordered the formation of a fact-finding committee to investigate the corruption and economic collapse of three financial institutions listed on the capital market. This committee will also determine the responsibility of the Bangladesh Bank officials who have been responsible for looking after these institutions since 2002. The then Deputy Governor of Bangladesh Bank, AKM Sajedur Rahman Khan, was made the head of this committee. After the investigation, the committee submitted a report to Bangladesh Bank and the High Court in 2023. But for unknown reasons, no further progress has been made.
No exemplary punishment has been given for the irregularities that have taken place in financial institutions including Bangladesh Industrial Finance Company (BIFC), People’s Leasing and Financial Services and International Leasing and Financial Services. Due to this, irregularities and looting in the financial sector are increasing. According to the Fact Finding Committee report, despite the fact that huge amounts of money have been looted from the two institutions over the years, the investigation report held 249 officials of Bangladesh Bank, including five former deputy governors, responsible for not taking any action. The former deputy governors are Sitangshu Kumar (SK) Sur Chowdhury, SM Moniruzzaman, Murshid Kuli Khan, Abu Hena Mohd. Razee Hassan and Md. Nazrul Huda. Apart from this, former executive directors AHM Kay-Khasru, Md. Nowshad Ali Chowdhury, Md. Mahfuzur Rahman, Sheikh Abdullah, Joarder Israel Hossain. The names of various officials including Md. Shah Alam, ATM Nasir Uddin, Sheikh Abdullah, ANM Abul Kashem, Sirajul Islam have been mentioned in the investigation report. The role of the same individuals has also been questioned in the investigation of People’s Leasing.
The Financial Institutions and Markets Department, Inspection Department, and the then GM and above officials of Bangladesh Bank have been held responsible for the failure to control the irregularities that occurred in People’s Leasing until the special inspection in 2014 and for handing over control of the institution to PK Halder’s associate Ujjal Kumar Nandi and his followers.
Exclusive power granted by Bangladesh Bank: There are clear provisions in various sections of the Financial Institutions Act 1993 to ensure the business activities and rules and regulations of financial institutions. But Bangladesh Bank issued six circulars from 1997 to 2003, giving exclusive power to financial institutions, which was in violation of Section 18 of the Act. The circulars are FID Circular 3 in May 1997, FID Circular 1 in January 1999, FID Circular 7 in June 2001, FID Circular 4 in October of the same year, FID Circular 11 in December 2002 and FID Circular 3 issued in June 2003.
The investigation committee believes that this illegal generosity of Bangladesh Bank is the real force behind People’s Leasing’s uncontrolled illegal activities and creating chaos in the financial sector. Using these circulars, People’s Leasing has collected deposits by offering higher interest rates than the banks and has looted and looted people’s money.
Ujjal Kumar Nandi, one of PK Halder’s associates, and his followers took charge of People’s Leasing and Financial Services on November 18, 2015. Then, by placing their own people on the board and management, they looted more than Tk 2,300 crore from the company in the next three years. According to the latest calculation as of December 2020, the total assets of the company were Tk 1,290 crore. In contrast, the liabilities were Tk 3,875 crore. That is, about Tk 2,600 crore was looted from the company in 5 years. The report of the five-member fact-finding committee formed on the orders of the High Court has revealed the following picture: How is People’s Leasing: At the end of last June, the default loan rate in People’s Leasing was 99.40 percent. During this period, the company gave a total loan of Tk 1,750 crore. Out of this, Tk 1,680 crore was defaulted. There are also various questions about their current board and management. After the uprising of students and the public, a letter was sent to the governor to remove the company’s managing director, Sagir Hossain. Various irregularities of this MD have been mentioned in it. Not only that, there are also various allegations against the board formed by the High Court. According to the rules, the chairman of the company is not supposed to do office regularly, but the chairman of People’s Leasing, Hasan Shahed Ferdous, is doing office regularly. Several senior officials have confirmed that he is even interfering in the work of officials. At the same time, the members of this board do not want to follow the instructions of the central bank properly. Several officials said that this is putting the deposits of investors in the institution at risk.
A top official of the central bank said on condition of anonymity, “We had given instructions to liquidate People’s Leasing. But the board has been formed there from the high court. Now, if we give them any instructions, the High Court shows us.
When asked about these matters, People’s Leasing Chairman Hasan Shahid Ferdous told Daily Industry, “We have already been able to withdraw money worth Tk 80 crore. From this money, the money of customers who have humanitarian problems is being returned as per the court’s orders.”
Regarding the interference in the work of the management authority, he said that it has to be done. Whoever is responsible for it has to be held accountable. When the looting happened earlier, there was no accountability. In addition, the chairman said that an audit is being conducted on what kind of irregularities have occurred so far. Managing Director Sagir Hossain Khan could not be reached even after calling him several times to find out about the complaint.
What is status of other financial institutions: Former Chairman of FAS Finance and Investment Siddiqur Rahman, Vice Chairman Jahangir Alam, Managing Director (MD) Russell Shahria and the board of directors have embezzled the lion’s share of the institution’s money. As a result, 99.89 percent of the loans have become defaulters. A total of Tk 1,823 crore has been disbursed. Of this, Tk 1,821 crore has defaulted. Not only that, the institution’s safety reserve (provision) deficit is Tk 5.5 billion. Recently, Bangladesh Bank reconstituted the institution’s board. Former Major General Md. Anwarul Islam has been made its chairman. The remaining four independent directors are former Executive Director of Bangladesh Bank Md. Abdul Hakim, former Deputy Managing Director of Agrani Bank Anwarul Islam, former General Manager of Janata Bank Md. Mokhlesur Rahman and Mostafa Kamal Ahmed.
It is known that until 2012, the non-bank financial institution FAS Finance and Investment had sole control over the Nitol-Niloy Group. Until that time, about 35 percent of FAS shares were owned by various institutions and individuals associated with the Nitol-Niloy Group. In 2017, the entire institution was taken over by PK Halder. Since then, money has been looted in the institution.
Fareast Stocks and Bonds Limited (FSBL), a subsidiary of Fareast Finance and Investment Limited. Tk 4.7 billion was looted by showing loans in the names of 31 institutions. Although the original money belonged to Fareast Finance and Investment Limited, that money was released in the names of 31 institutions through FSBL. The money was withdrawn in several stages from April 2010 to June 2011. The audit report of a firm called Eknabin Chartered Accountants has confirmed irregularities in the loan disbursement process. A complaint has been filed with the Anti-Corruption Commission (ACC). Initial evidence has been found of the involvement of Anwar Hossain Khan, the entrepreneur and board member of Fareast Stocks and Bonds Limited and former MP from Lakshmipur-1 (Ramganj) constituency, in the financial irregularities. In addition, the report by Eknabin Chartered Accountants states that the irregularities occurred with the direct and indirect collusion of Fareast Finance and Investment Limited (FFIL) Chairman MA Khalek, former Chairman MA Wahab, Greenland Engineers and Tractor Company Limited (GATCO) Director KM Khaled and Entrepreneur Director Aminul Haque.
Bangladesh Industrial Finance Corporation Limited (BIFC) founder chairman Abdul Mannan holds about 62 percent of the total shares of this institution. In addition, money has been withdrawn from this institution as loans by mentioning the names of 54 institutions and individuals related to the Sunman Group. Abdul Mannan is involved in these loans. And at the time of the loan disbursement, his wife Umme Kulsum Mannan was the chairman of BIFC. At the latest count, BIFC’s loans to institutions and individuals related to Abdul Mannan are about Tk 621 million. All of this is in default. If calculated with interest, about Tk 1,200 million is stuck with Abdul Mannan. At the end of June, the institution’s total debt stood at Tk 766 million. Of this, Tk 743 million has become defaulted, which is 97 percent of the total debt. Currently, the institution also has a provision deficit of more than Tk 25 million.
Tk 2,500 crore was looted from International Leasing and Financial Services Limited through a non-existent company. Due to this, the company is now on the road. The money was looted under the leadership of the discussed PK Halder. The key to this was Rashedul Haque, the then DMD of Reliance Finance, who later became the MD of the company. Not only that, this group was involved in giving loans to other companies. PK Halder and the discussed business group S Alam based in Chittagong are the main beneficiaries of the bulk of the loans of this company. The current amount of loans distributed by the company is Tk 4,127 crore. Out of this, Tk 3,864 crore has defaulted, which is 93.60 percent of the total loan. Aviva Finance, which is controlled by the controversial business group S Alam based in Chittagong, is also almost on the verge of death. The company’s previous name was Reliance Finance. S Alam Group has looted four-five companies through PK Halder. Reliance Finance was one of them. Later, the name of the company was changed to Aviva Finance. But there was no change in its character. Currently, the total loan disbursed by the company is Tk 2,784 crore. Out of this, Tk 2,354 crore is defaulted, which is 84.55 percent of the total loan. The company has a provision deficit of Tk 441 crore.
Phoenix Finance is sinking due to various reasons including loan irregularities. The central bank dismissed the company’s former MD in December last year for his involvement in irregularities and corruption. The letter from the central bank said that the officials involved in loan irregularities of the customer companies SA Oil Refinery Limited, Aman Cement Mills Unit-2, Monospool Paper Manufacturing Company, Mahin Enterprise, Mac Steel Industries and customers Nazma Parvin, Farhan Mosharraf should be identified through an internal investigation and appropriate administrative and legal action should be taken. After completing the investigation process, necessary steps should be taken to prevent the concerned officials from traveling abroad while administrative and legal action is under process. At the end of June, the amount of loans disbursed by the company stood at Tk 2,648 crore. Of this, Tk 2,234 crore has defaulted, which is 84.36 percent of the total loan. The company’s provision deficit is currently Tk 14 crore.
“Currently, Bangladesh Bank is working to improve the condition of a few banks. This may be why it is becoming difficult to pay attention to financial institutions. However, Bangladesh Bank has already restructured the board of one financial institution. It seems that attention will be gradually paid to all institutions.” He also said, “Financial institutions here have not been able to show their activities. They have not been able to come up with new products. They have not contributed to the stock market either. That is why these financial institutions, even the entire sector, are not able to contribute the same amount as a large branch of a big bank is making to the country’s economy. The central bank needs to pay attention to expanding their activities.”
