Bangladesh Financial Intelligence Unit instructed all the banks and non-banking financial institutions not to do any transaction with People’s Leasing
Bangladesh Bank (BB) on Monday froze all bank accounts of People’s Leasing and Financial Services (PLFS), as the central bank started the liquidation process of the ailing non-bank financial institution (NBFI).
Bangladesh Financial Intelligence Unit on the day instructed all the banks and non-banking financial institutions not to do any transaction with People’s Leasing and Financial Services Limited.
Besides, the BFIU also instructed banks and non-bank financial institutions to block fund withdrawal from accounts of eight former directors of People’s Leasing and three other top former executives, said Bangladesh Bank Deputy General Manager Md Asaduzzaman Khan.
The eight former directors are M Moazzam Hossain, Nargis Alamin, Humaira Alamin, Arafin Shamsul Alamin, Mohammad Yusuf Ismail, Motiur Rahman, Biswajit Kumar Roy and Khobiruddin Mia, and former top executives Kobir Mustaq Ahmed, Nripendra Chandra Pandit and Mohammad Shohidul Haque. M Moazzam Hossain was also chairman of PLFS.
Earlier on Sunday, Md Asaduzzaman Khan, deputy general manager of the BB’s financial institutions department, was appointed as the liquidator as per a High Court order.
Talking to Dhaka Tribune, Md Asaduzzaman Khan said: “All accounts of People’s Leasing have already been frozen by the central bank. Now we are set to form a body to liquidate PLFS. We will then take the company under our control."
“People's Leasing would send us a report about their current financial status within the next 21 days as per law. We will verify the report and audit the company if needed,” he added.
"The central bank has started to liquidate PLFS considering its fragile financial state. Even concern grows over depositors’ protection. In the process, we will firstly try to return the money to the general depositors," said Bangladesh Bank Executive Director Md Shah Alam.
According to sources in People’s Leasing, the company operates its regular accounts with Dutch-Bangla Bank, Bank Asia, Prime Bank and One Bank.
PLFS's total deposits stands at Tk2,036 crore. Of the amount, Tk850 crore were deposited by 15 banks and non-bank financial institutions, Tk500 crore by some private organizations and the rest by general depositors, according to the source.
International Leasing and Financial Services (ILFS), another NBFI, alone had Tk227crore in PLFS. ILFS may be in serious trouble if it has to write off the sum.
On July 14 this year, the High Court gave the go-ahead to the central bank to appoint a liquidator for People’s Leasing and Financial Services (PLFS).
A bench of Justice Muhammad Khurshid Alam Sarkar also ordered the Bangladesh Bank to freeze the accounts of those who were in PLFS’s board until 2015.
Earlier, on June 27 this year, 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.
At the end of September, 2018, the total amount of outstanding loans stood at Tk1,131 crore. Their defaulted loans stood at Tk748crore, which was 66.14% of the total loans, according to the Bangladesh Bank data.