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The NBFI has one month to make the amendments
The Bangladesh Bank has instructed Uttara Finance and Investments, a non-bank financial institution where it found huge irregularities, to amend its financial report for 2019 within the next month.
The instruction was sent out to Uttara Finance’s Managing director SM Shamsul Arefin by the central bank’s financial institution and markets department on February 9.
Before the move, the central bank on December 1 last year had sought an explanation from Uttara Finance after finding huge irregularities in its books.
Uttara Finance’s response, which was sent on January 5 this year, was 120 pages long.
But the NBFI’s MD acknowledged that the explanation was not sufficient in response to the queries about the irregularities.
And the BB officials were not satisfied with the explanation either.
“It was not at all accurate and was, in fact, insufficient,” said a senior official of the BB seeking anonymity as he is not authorised to speak with the media.
Subsequently, the BB instructed the NBFI to amend its financial report for 2019.
But, the central bank has yet to take any legal action against the organisations and persons who have been involved in the irregularities in the 25-year-old NBFI, where automobile distribution giant Uttara Motors has a substantial stake.
“Depositors will panic if any legal action is taken at this moment,” the BB official added.
Arefin, who has been slapped with a Tk 5 lakh fine by the BB for his complicity in hiding information on the credit information bureau (CIB) report, acknowledged receiving the instructions from the central bank.
“We are now working day and night to amend the financial statement,” he told Dhaka Tribune on Sunday.
Uttara Finance is adjusting its balance sheet through loan recovery from clients, Arefin added.
The irregularities at Uttara Finance, which has been flying under the radar, came to light after the central bank last year inspected the NBFI’s books until 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.
The NBFI, which was established in 1995, logged in losses of about Tk 15 crore between July and September of last year, in contrast to a profit of Tk 33.6 crore.
At the end of September, its 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.
The company, which has been listed with the stock market since 1997, will most likely be getting a special auditor from the Bangladesh Securities and Exchange Commission for combing over the errant NBFI’s financial statements.
Shares of Uttara Finance lost 13.8 per cent since January 10, when Dhaka Tribune broke the news of the NBFI’s irregularities. On Tuesday, they closed at Tk 43.6, which is the same as in the previous day.
In 2019, the company logged in 14.3 per cent higher profit of Tk 118.3 crore for which it disbursed 15 per cent cash and 5 per cent stock dividend. A year earlier, it had provided a 20 per cent stock dividend.
(DT)
