BSEC recasts FAS Finance's Board
The previous board, formed by BSEC in 2021, failed to revive the troubled NBFI
In a move to protect investor interests, the Bangladesh Securities and Exchange Commission (BSEC) has nominated five independent directors to the board of FAS Finance and Investment Limited, a non-bank financial institution which is currently experiencing underperformance.
Among these directors, four are newly appointed, while one has been reappointed to the NBFI's board. The commission issued letters to relevant parties regarding these appointments today.
The newly appointed independent directors are — Maj Gen Md Anwarul Islam (Retd), a professor (adjunct) at Bangladesh University of Professionals; Md Kamal Uddin Talukder, a former secretary; Selim Omrao Khan, a journalist; Md Mokhlesur Rahman, a former banker.
Mohammed Nurul Amin has been reappointed as an independent director and chairman of FAS Finance.
Keep updated, follow The Business Standard's Google news channel
In May 2021, the securities regulator formed the board of directors of the company for the first time to revitalise its business. At that time, the commission also nominated five independent directors, and two directors were nominated among shareholders holding a minimum of 2% of the NBFI's paid-up capital.
The market regulator also appointed A Wahab & Co, chartered accountants, as a special auditor to audit the company's financial statements for the year ending 31 December 2019.
According to the BSEC, sponsors and directors of the company jointly hold 13.20% of the paid-up capital, failing to comply with the commission's 30% shareholding rules.
The previous board could not bring about any significant changes in the company, and general shareholders have continually suffered by investing in this NBFI. The company has not declared any cash dividends since its listing, which has been a point of concern for both the regulator and shareholders.
Industry insiders said that financial institutions are suffering from a liquidity crisis and must compete intensely with banks. Moreover, various irregularities have tarnished their reputation, making it difficult to attract deposits.
Additionally, many borrowers have been unable to repay loans on time due to poor business conditions, leading to a steady increase in non-performing loans, they said.
Poor financials
The auditor's report draws attention to the classification of loans, advances, and leases in the financial statements of FAS Finance, where 99.51% of these are classified as problematic.
A review of several loan files reveals significant issues with loan recovery, resulting in a substantial amount of classified loans and a liquidity crisis for the entity.
From January to September, the consolidated net interest income was negative at Tk123 crore, compared to Tk130 crore in the same period the previous year.
The net loss stood at Tk203 crore, down from Tk267 crore a year ago. The per-share loss was Tk13.63, and the net asset value per share was Tk99.75 as of the end of September 2023.
FAS Finance and Investment Limited was listed on the stock exchanges in 2008. As of 31 May 2024, sponsors and directors hold 13.2%, institutions hold 8.40%, and general investors hold 78.40% of the company's shares.
The share price of the company closed at Tk3.40 on the Dhaka Stock Exchange on Tuesday.
FAS Finance and Investment Limited provides lease financing, transport financing, term financing, project financing, house financing, SME financing, and service sector financing.
