'Legal tangles' hold back Fareast from returning Tk1.08cr to training institution

Fareast Finance and Investment Limited has been unable for six years to return deposits of Tk1.08 crore to the Bangladesh Institute for Professional Development (BIPD), a training and research institution catering to teachers and students in the country's financial sector.

On top of not being able to withdraw the deposits, the BIPD is also not receiving profits on the deposits from the finance company. 

According to the training institution, they received no solution on the matter despite repeated appeals to authorities including the central bank, the finance ministry, the NBR, and the Bangladesh Securities and Exchange Commission.

Regarding the issue, Fareast Finance authorities told TBS that they are unable to return the BIPD deposits due to legal complications.

BIPD Director General Mortuza Ali told TBS that the institute had opened six fixed deposit receipt (FDR) accounts with Fareast Finance and Investment Limited between 2016 and 2018. Despite the maturity of all FDRs on various dates, Fareast Finance is not making any payments or responding to any letters.

Mortuza Ali told TBS that they have sent 34 letters and emails to Fareast Finance till date, but there has been no reply.

The director further said, "The existence of the training institute is threatened today because of Fareast Finance's unfair and unreasonable activities.

"Our FDRs of Tk1.08 crore were for a six-month period with provision of auto renewal after confirmation. Although profits were initially disbursed, payments have ceased since 2018, and no renewals have been made."

The BIPD director also said the Financial Institutions Department of the finance ministry had directed the Bangladesh Bank to investigate Fareast Finance's failure to repay the BIPD and take appropriate legal action. However, the central bank is yet to initiate any measures in this regard.

According to a central bank report, Fareast Finance's total debt stood at Tk940 crore as of March 2023, with defaulted loans amounting to Tk886 crore, representing a staggering 94.25% of the total loans issued.

As per the finance company's latest quarterly financial statements dated 30 September 2023, a net loss of approximately Tk45 crore was reported for January to September 2023 period, which was Tk48 crore in the same period in 2022.

Fareast Finance Managing Director Muhammad Ali Zaryab said the NBR had asked to freeze the accounts of some BIPD directors due to allegations of financial irregularities. "As BIPD still has relations with those directors, we are unable to return the deposits due to legal complications."

When asked about the alleged non-reply to the letters from BIPD, he said, "BIPD has written to several regulatory bodies in this regard and when the regulatory bodies asked us about the status, we have replied accordingly."

Contacted, BIPD Director Mortuza Ali said, "Several independent directors of our institution were appointed from an audit firm. Later they were not retained as shareholders due to non-payment of the agreed amount to BIPD."

"The NBR's instructions to freeze the accounts are related to some of those previous shareholders and Fareast Finance were asked to freeze the individual accounts of those shareholders," the director said. 

"We have no institutional relationship with those shareholders anymore but still Fareast Finance is not returning our deposits," he added.