People's Leasing plans to rebrand itself as Sonar Bangla

The scam-hit non-bank financial institution (NBFI) People's Leasing and Financial Services plans to rebrand as Sonar Bangla Lease Finance PLC to get rid of the negative image as part of its revival strategy.

The NBFI has plunged into severe trouble as Prashanta Kumar Halder, commonly known as PK Halder, swindled around Tk3,500 crore from several financial institutions, including People's Leasing.

The High Court-appointed board of People's Leasing has proposed several plans to revive the NBFI, including fresh capital injection through partnership, loan recovery, and proper utilisation of its assets.

Hasan Shaheed Ferdous, chairman of People's Leasing and Financial Services, told The Business Standard, "The current name has become synonymous with fraudulence. Therefore, 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.

To seek approval for the new name from its shareholders, People's Leasing will hold an extraordinary general meeting on 26 December.

Revival plans

Following the High Court order, the new board has formulated several plans to bring People's Leasing back on track. The emphasis has been placed on the recovery of defaulted loans to ensure that the company can repay depositors.

However, 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.

Hasan Shaheed Ferdous said, "We have already recovered Tk150 crore in defaulted loans. Out of the recovered amount, we have kept Tk30 crore as fixed deposits to meet operating expenses and pay back around 1,500 depositors. A part of the recovered amount is being used for lending, where we earn interest income regularly."

"Besides, we own an office building where we have rented out vacant spaces, helping us earn a significant amount by utilising the assets," he added.

The chairman mentioned that they have sought Tk100 crore from the government on a partnership basis. According to the plan, the government will receive a percentage of the earnings from the funds.

He said they have also engaged in discussions with several entrepreneurs who are interested in investing here in partnership, adding, "Many of them have requested us to take the necessary steps to lift the share trading suspension on stock exchanges."

"After that, we applied to the Bangladesh Securities and Exchange Commission to remove the embargo on its trading. The commission has instructed us to follow some measures to get the embargo removed," he said.

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

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.

Moreover, the central bank removed five directors from the NBFI's board in 2015 due to their alleged involvement in the 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.