High Court passes order to freeze former directors' bank accounts
Bangladesh Bank on Sunday filed a petition with the High Court seeking liquidation of People’s Leasing as the organization’s financial health deteriorated badly in recent times because of loan irregularities.
The High Court accepted the petition and passed an order to freeze all bank accounts of former directors of People's Leasing and Financial Services (PLFS), who were appointed before 2015.
An HC bench of Justice Muhammad Khurshid Alam Sarkar passed the order after hearing a petition filed by the central bank seeking liquidation as per the Financial Institutions Act, 1993.
Barrister Tanjib-Ul-Alom along with Kazi Ershadul Alam stood for the petition.
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.
The NBFI’s problems came to light in 2013-14, when some of its directors made off with more than Tk1,000 crore by way of submitting fake documents, he added.
In 2015, the central bank had removed five directors — Khabir Uddin Miah, Motiur Rahman, Arafin Shamsul Alamin, Humaira Alamin and Nargis Alamin — for their involvement in the financial scandal.
Following the liquidation move, individual and institutional depositors are rushing to the People’s Leasing and Financial Services (PLFS) headquarters at Motijheel every day to get back the money they kept with the financial institution.
On July 10, in a press briefing, Bangladesh Bank (BB) assured that the depositors would get back their money as assets of the company was still bigger than its liabilities.
At the end of September, 2018, the total amount of deposits of PLSF stood at Tk2,086 crore. But they do not have any cash to run daily activities.
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.
Due to the big losses, the listed PLSF failed to announce any dividend since 2014.
Of the total shares, 67.48% are held by general shareholders, 23.11% shares by sponsors and directors, 8.77% shares by institutional investors and 1.19% shares by foreign investors.