BB dissolves Uttara Finance board, appoints five new directors

Bangladesh Bank has dissolved the board of directors of Uttara Finance and Investment Limited and reconstituted it with five new directors, citing governance and oversight concerns.

The decision was taken under the Financial Company Act, 2023, as part of the central bank's ongoing efforts to strengthen corporate governance in the non-bank financial institution (NBFI) sector, according to a price-sensitive disclosure filed with the Dhaka Stock Exchange (DSE) today (5 February).

As per the disclosure, Mukhter Hossain has been appointed chairman and independent director of the newly formed board. The other independent directors are Shafiul Azam, Niamul Kabir and Rafiqul Islam, while Mahbub Alam has been appointed as a director.

Following the announcement, shares of Uttara Finance rose 2.40% to close at Tk12.80 on the Dhaka bourse.

This is not the first time the central bank has intervened in the institution's management. In 2022, Bangladesh Bank dissolved the company's board and appointed independent directors amid allegations of governance failures and financial irregularities.

The latest move follows a series of investigations initiated after Bangladesh Bank received information in 2019 regarding widespread violations of rules and serious financial misconduct at Uttara Finance. The allegations included irregular transactions amounting to at least Tk3,440 crore, misuse of company funds for personal purposes by directors, and withdrawals made under the guise of advances. The then managing director and several board members were reportedly involved.

Subsequently, the central bank scrutinised the company's audited financial statements for 2019 following multiple complaints and issued a number of corrective directives in 2021 after a prolonged investigation. Further evidence of irregularities later surfaced through a special audit conducted by external auditor Rahman Rahman Haque.

According to audited financial statements disclosed later, Uttara Finance incurred a net interest loss of Tk61.17 crore, an operating loss of Tk108.31 crore, and a net loss after tax of Tk435.54 crore in 2020. The loss per share stood at Tk33.13, reflecting a sharp deterioration in profitability.

The auditor's report also highlighted a capital shortfall of Tk711.55 crore as of December 2020, underscoring the depth of the financial distress that prompted continued regulatory intervention.