BIFC fails to pay back depositors, liquidation is not the whole answer
NEWS media reported that Bangladesh Industrial Finance Company Ltd (BIFC), a non-bank financial institution or NBFI, faces liquidation as it has failed to pay back loans and deposits of Tk 640 crore to 19 banks and seven NBFIs. Besides, 96 percent of the BIFC’s outstanding loans of Tk 822 crore became defaulted in December last year. The embezzlers inside the country’s banking sector over the last few years pushed the economy near to the verge of bankruptcy. The regulator’s nonchalance and the government’s mercy may have played active role behind the poorness of BIFC.
As per documents, 13 banks and one NBFI already declared the BIFC a defaulter and requested Bangladesh Bank (BB) to help them get back their money. In December 2015, the central bank appointed one of its general managers as an observer in the BIFC board but the move could not help improve the institution’s financial health. Without steering loan recovery from the known defaulters, as they take loans not for paying back, the BB has mulled options for fresh liquidation.
According to the Financial Institutions Act 1993, Bangladesh Bank can apply to the High Court for liquidating any NBFI for failure to pay back loans and deposits but liquidation could not be the right move without institutional reform.
In a probe in 2016, the BB found former BIFC Chairman Maj (Retd) Abdul Mannan largely responsible for the institution’s financial crisis. It found that Maj Mannan, also secretary general of Bikalkpa Dhara Bangladesh, had a big role in it.
But Maj Mannan claimed that he is a victim of conspiracy by a Chattogram-based business group and some central bank officials. A Chattogram-based conglomerate has been trying to take over my shares in the BIFC illegally, and a vested quarter of the central bank is helping it. He also claimed that he had recovered Tk 120 crore from the defaulters but the new board embezzled that money.
Asking for investigation into the gross illegalities in financial institutions has no meaning in the real sense because the money lost is money gone. Now there will be cases, some other people will gain illegally. And the business will be as usual. Although we do not know the details but in our view liquidation must not be seen as the complete answer to the crisis.
According to the Financial Institutions Act 1993, Bangladesh Bank can apply to the High Court for liquidating any NBFI for failure to pay back loans and deposits but liquidation could not be the right move without institutional reform.
In a probe in 2016, the BB found former BIFC Chairman Maj (Retd) Abdul Mannan largely responsible for the institution’s financial crisis. It found that Maj Mannan, also secretary general of Bikalkpa Dhara Bangladesh, had a big role in it.
But Maj Mannan claimed that he is a victim of conspiracy by a Chattogram-based business group and some central bank officials. A Chattogram-based conglomerate has been trying to take over my shares in the BIFC illegally, and a vested quarter of the central bank is helping it. He also claimed that he had recovered Tk 120 crore from the defaulters but the new board embezzled that money.
Asking for investigation into the gross illegalities in financial institutions has no meaning in the real sense because the money lost is money gone. Now there will be cases, some other people will gain illegally. And the business will be as usual. Although we do not know the details but in our view liquidation must not be seen as the complete answer to the crisis.
