Bangladesh Bank rejects name change request of People’s Leasing

The Bangladesh Bank has rejected the proposal of People's Leasing and Financial Services Limited to change its name as the scam-hit non-bank financial institution (NBFI) is sub judice in the court, the company stated in a stock exchange filing on Wednesday. 

The NBFI fell into a dire strait after Prashanta Kumar Halder alias PK Halder, former managing director of NRB Global Bank and Reliance Finance Ltd, fled abroad after embezzling Tk3,500 crore in loans from several financial institutions, including People's Leasing.

In an attempt to get rid of the negative image and revive business, the High Court-appointed board of People's Leasing had proposed to change the company's name to Bangla Lease Finance PLC. 

In this regard, the board called an extra-ordinary general meeting (EGM) on 26 December, where the main agenda was to secure shareholders' approval for altering the name.

Company Secretary Md Armia Fakir said though the EGM was held on the scheduled date, no decision was taken as the licensing authority did not allow the name change. 

"We are going to hold a press conference where the company's chairman will present the overall matters of the company."

Other than changing name, the High Court-appointed board also proposed plans such as injecting fresh capital through partnership, loan recovery, and proper utilisation of assets to revive the business. 

Hasan Shaheed Ferdous, chairman of People's Leasing, recently told TBS, "The current name has become synonymous with fraudulence, which is why we have decided to change it. This is not a new practice in the country. Previously, Farmers Bank averted a crisis by changing its name to Padma Bank."

"We recently organised a view-exchange meeting attended by prominent bankers and businessmen. Most participants preferred changing the name, believing it would aid the company in implementing its revival plans," he added.

According to its audited report for 2021, People's Leasing has been adversely affected by default loans, with classified amounts reaching 99% of the total disbursements.

In addition, People's Leasing is working to ensure the proper and profitable utilisation of its assets. It is also seeking new funds and investors to operate at full capacity.

In July 2019, the Dhaka and Chattogram bourses suspended the trading of People's Leasing shares for the interest of investors.

In October this year, People's Leasing conducted its annual general meeting (AGM) after six years, following a directive from the High Court. The AGM was held for 2021, and the previous year's AGM has not been held yet.

People's Leasing, which commenced operations in 1996, has reportedly been facing a wide range of financial scams. In response, the Bangladesh Bank appointed an observer at the company in 2015.

Alongside, the central bank removed five directors from the NBFI's board due to their alleged involvement in an embezzlement of Tk358 crore.

Subsequently, the company's liquidation process began in April 2019 after its board informed the central bank about its inability to pay its depositors back after maturity.

However, in July 2021, the High Court threw a lifeline to the struggling NBFI by reconstituting its board of directors, thus saving the company from being liquidated.

In December 2021, the company's total deposits stood at Tk2,661 crore, and total outstanding loans amounted to Tk1,206 crore.