The twin moves are the start of a long list of penalties coming for the errant NBFI
The jig is up at Uttara Finance and Investment, it seems.
The Bangladesh Securities and Exchange Commission (BSEC) is set to appoint a special auditor to investigate the financial statements of the errant non-bank financial institution, where automobile distribution giant Uttara Group has a sizeable stake.
Then on Monday, the Bangladesh Bank slapped SM Shamsul Arefin, the managing director of Uttara Finance, with a Tk 5 lakh fine for his complicity in hiding information on the credit information bureau (CIB) report.
BB Spokesperson Md. Serajul Islam confirmed the matter to Dhaka Tribune.
The fine is the first in a long list of penalties that are coming up.
Meanwhile, the audit firm will work on the company’s financial statements and other findings, senior officials of the BSEC told Dhaka Tribune.
The listed NBFI must assist the auditor as required, they said.
The move by the securities regulator comes after Shibli Rubayat-Ul-Islam, its chief, told Dhaka Tribune last week that action would be taken against Uttara Finance considering the interest of retailinvestors.
In recent weeks, the securities regulator has dispatched auditors to Ring Shine Textile, Shurwid Industries, Fareast Islami Life and Al-Haj Textiles after their activities raised eyebrows.
Uttara Finance has emerged as a hotbed for loan irregularities involving about Tk 6,000 crore following an inspection by a three-member team of the BB into the NBFI’s books as of 2019.
From lending money to director’s company without any application to paying huge amounts of cash to its chairman for no concrete reason, from creating fake loans to pave the way for Uttara Group to withdraw Tk 335 crore to the MD taking out money without any approval, from concealing information of its directors using its coffers for personal needs to using additional floor space owned by one of the directors without the BB permission, the NBFI has indulged in a host of indiscretions.
Subsequently, the central bank on December 1 last year sought an explanation from the 25-year-old NBFI over the irregularities.
On January 5, Uttara Finance dispatched a 120-page explanation to the BB.
No explanation is sufficient in response to the queries about the irregularities, Arefin said in the cover letter to the file sent.
“We are offering you apology that such types of mistakes will not happen in the future,” the letter read.
Since news broke of Uttara Finance’s transgression on January 10, its share price declined 13.8 per cent. Yesterday, its shares closed at Tk 43.6.
Uttara Finance, which was established in 1995, is an ‘A’ category share: it provided 15 per cent cash and 5 per cent stock dividends for its 2019 financial year, in which it logged in 14.3 per cent higher profit of Tk 118.3 crore.
However, between July and September of last year, it logged in losses of about Tk 15 crore, in contrast to a profit of Tk 33.6 crore a year earlier.
At the end of September, Uttara Finance’s deposits stood at Tk 2,073.6 crore, up 8.7 per cent year-on-year.
Its loans stood at Tk 3,440.5 crore at the end of September, in contrast to Tk 3,431.3 crore.
Uttara Finance could not be reached for comment.