FAS Finance bags loan from both private banks against same security
Prime Bank Ltd (PBL) and Social Islami Bank Ltd (SIBL) are at loggerheads over encashment of a Tk30 crore FDR (Fixed Deposit Receipt) initiated by FAS Finance and Investment Limited (FFIL) as both the private banking companies have lent money to the leasing company against the same security instrument.
The FFIL's FDR is now in the custody of SIBL while SIBL has confirmed lien to PBL over the FDR enabling FFIL to borrow Tk300 million from the latter bank.
Following disclosure of a recent Bangladesh Bank inspection report on the weakening financial health of FFIL, the PBL first pursued the FFIL to get repaid.
As repeated attempts for recovery of its funds failed, the PBL then requested the SIBL to extend facility to encash the FDR, which SIBL did not comply.
At one stage, the PBL filed a written complaint with the central bank seeking immediate arbitration as per banking rule and regulations, which say that once a bank or non-bank financial institution (NBFI) issues lien confirmation over a security instrument, it must oblige to encashment request.
Meanwhile, FFIL bagged credit facility from both PBL and SIBL simultaneously.
Commenting on this, a Bangladesh Bank official said: "Since FFIL also owed to SIBL, the bank is trying to hold the FDR until it gets payback from FFIL."
Over this dispute, SIBL Managing Director Quazi Osman Ali told Dhaka Tribune that a tripartite process of negotiation was going on for a mutual settlement.
"We are in a bank-to-bank deal in which all the three parties including principal borrower is involved. We will find a mutual settlement to this, which arose from non-payment by the principal borrower to PBL. The principal borrower, FFIL, has sought time. Correspondence is going on," Osman Ali said.
He also denied the allegation that his bank did not comply with PBL request to encash the FDR.
Meanwhile, PBL Managing Director Rahel Ahmed told Dhaka Tribune that his bank maintained all the formal procedures to get encashment against the FDR.
"We have also informed the central bank requesting for an arbitration," he said, adding, "After this, we will go for enforcement of all legal procedures needed to encash the FDR, if SIBL refuses to comply."
He said non-compliance with banking rules and regulations would create bad precedence which should not be taking places for the welfare of the financial sector.
Pritish Kumar Sarker, managing director and chief executive officer of FFIL, admitted to the fact that his company owed to both the banks.
"We have some overdues with the PBL against loans. We will payback gradually," he said.