People’s Leasing plans to start lending from January: Chairman

People's Leasing and Financial Services Ltd (PLFSL) is likely to avert the proposed liquidation under the high court's supervision as its business wheels have resumed rolling.

The scam-hit non-bank financial institution (NBFI) is planning to start small ticket lending from January next, said Hasan Shaheed Ferdous, the new chairman of its court-appointed board of directors.

In a recent interview with The Business Standard the lawyer and former district and session judge said PLFSL under the restructured board has already recovered over Tk70 crore from defaulters, out of which nearly Tk20 crore has been used to partially pay back the depositors on humanitarian conditions in compliance with the court order, Tk20 crore is kept in fixed deposit scheme, and the remaining cash is in hand.

Around Tk4 crore is being recovered every month from the borrowers who already have responded to the NBFI's calls to regularise loans. Hasan Shaheed Ferdous is hopeful that the amount would increase to near Tk10 crore soon as recovery efforts are much stronger now.

The court-appointed board comprises experts from diversified fields including law, accounting, administration, and academia and they are devotedly working under the high court's instruction to create an example of public service to help revive a dying financial institution.

"Alongside efforts to increase cash inflow, maximise loan recovery, and best utilise the assets, we are also minimising PLFSL's costs through shutting branch offices, renting the commercial floor space above its head office at Paltan, Dhaka," he said.

Executives who did not collaborate with the scammers are being allowed to work with the firm. PLFSL is a 25-member team right now, including some new faces.

"By the end of this year, we are expecting a Tk50 crore fund to disburse loans from," he said, adding that the move would help PLFSL earn more alongside regaining depositors' confidence.

PLFSL applied for a Tk750 crore lifeline from the government to pay back its depositors and it still hopes for the aid advised by the court.

A feasible revival plan?

Before its collapse a few years back, PLFSL was operating a disclosed balance sheet of overTk2,000 crore.

As the sheer portion of the loans went to the scammers involving some of its former directors in non-compliant ways, the firm failed to pay back depositors and the central bank in mid-2019 proposed to liquidate the firm and the High Court is leading the decision-making process on liquidation or revival.

Not all the loans were taken by shell or fake companies, PLFSL also has reputed clients like Partex Group. And as soon as the loan recovery team began its hard work, those clients are the first ones to respond by regularising loans, paying rescheduled instalments, and giving new guarantees against loans.

The main problem is with the loans that were taken without proper collateral and Hasan Shaheed Ferdous, having vast experiences as a practitioner of corporate law at the Chamber of prominent lawyer Dr M Zahir, as a member of Bangladesh judicial services, and also as a lawyer of the supreme court, believes it is very possible to recover a decent amount from the people behind the scam loans.

"We have shared our short, mid, and long-term plans with the regulators and the court, and we hope with everyone's support PLFSL will come back in business to recover its assets and clear liabilities," said the board chairman.

As soon as depositors will find PLFSL able to pay back their money, the firm will be on track and new business would help it grow to fill all the gaps in the balance sheet, he added.

He believes, like many scam loans which are treated as assets, some liabilities are also inflated and after the Tk750 crore to pay back depositors the firm would practically need around Tk500 crore to clear liabilities.

"Auditor had to work hard to retrieve information manually as the scammers ruined a lot of digital data," he said.

The Bangladesh Securities and Exchange Commission (BSEC) offered PLFSL a hand in securing fresh equity from investors home and abroad so that the death of a listed firm can be averted.

Some former directors who were not involved in any scam are also interested in helping their company revive, Hasan Shaheed Ferdous added.

"So, the door is not closed for PLFSL at all," he said, adding, "But, the depositors may have to wait a bit longer."

"A hole that was created over half a decade would need another half a decade to be filled-up."

"Till then, everyone's devotion, support, and austerity would be the key," he said.

"We the court-appointed people and executives are working hard, forgetting norms."

"I am writing some legal drafts free of cost to save lawyers' fees, it is an unusual situation," he concluded.