ICB moves to recover stuck FDRs from troubled NBFIs and banks

After suffering major losses from ill-fated investments — particularly fixed deposit receipts (FDRs) placed in weak and scam-hit non-bank financial institutions (NBFIs) — the Investment Corporation of Bangladesh (ICB) has initiated a recovery drive to reclaim its long stuck funds and restore financial stability.

Under its newly appointed chairman and managing director, the state-run investment agency has drawn up a roadmap for recovering the deposits. 

Several dedicated teams have been formed to pursue the funds, which were parked with various banks and NBFIs in exchange for attractive interest rates.

As of June 2024, ICB's irregular fixed deposit receipts (FDRs) in 10 non-bank financial institutions and two banks amounted to Tk920 crore, placed at various times over the past several years. Despite the maturity of these FDRs, ICB has yet to recover either the principal amounts or the interest.

Officials say many of the institutions have repeatedly deferred repayments, further exacerbating ICB's financial strain. 

Although the funds remain stuck, the state-owned investment corporation is required to maintain mandatory provisions against the unpaid principal, putting additional pressure on its net profit and overall financial health.

The prolonged fund blockage has also severely weakened ICB's liquidity position, as the corporation relies heavily on public capital and bank borrowings to sustain its operations.

The auditor of ICB raised a red flag regarding the corporation's FDRs across various banks and financial institutions. The annual report of ICB for FY24 stated that, according to a Bangladesh Bank letter issued in November 2024, the estimated provision against fixed deposits with non-bank financial institutions amounts to Tk364.80 crore. 

However, TBS could not confirm whether ICB has actually made this provision.

Citing ICB's financially distressed condition, Managing Director Niranjan Chandra Debnath, when asked about the FDR recovery drive, told The Business Standard, "These investments are essentially public funds that have remained stuck for years. To recover them, we have formed four teams that will oversee and regularly monitor the progress of the recovery process."

"We are trying our best, though we don't yet know what the outcome will be, as these are long-standing dues. We also plan to engage with the government in this effort, as ICB is currently in a distressing situation. Besides the FDRs, we are also focusing on recovering classified loans to strengthen the corporation's financial position," he added.

A senior ICB official, speaking to The Business Standard on condition of anonymity, said, "The FDRs were placed in those non-bank financial institutions at various times during 2018 and 2019. At that time, the financial condition of those institutions was fairly stable. However, due to various irregularities and fund misappropriations, ICB is now unable to recover the money deposited through those FDRs."

He added, "The previous board of directors had communicated with Bangladesh Bank and higher levels of the government to recover the funds, but those efforts yielded little result. As the financial conditions of those institutions deteriorated, the tenures of the FDRs were extended repeatedly. Now, not only is the principal stuck, but some of them are also unable to pay the interest."

He further said, "The current state of the capital market is also not encouraging. It has been in a prolonged slump, which has severely weakened ICB's financial position. In such a situation, the recovery of the stuck capital is extremely crucial."

The recovery plan and stuck investment

As per the decision of the ICB, the teams will regularly communicate with the respective institutions and fund recovery status will be presented to the General Manager (Accounts and Finance) through the Finance Division.

The report will be submitted to the Managing Director on the 5th of every month.

As per order of ICB, Babul Hossain, assistant general manager (AGM) of ICB and convener of a team will look after the FDRs at Padma Bank, FAS Finance, and Fareast Finance and Investment.

As of June 2024, ICB's investment in these institutions as FDRs are Tk154 crore, Tk56.94 crore and Tk74.23 crore respectively. 

Another team led by Sayed Hasan Uzzaman, AGM, will take care of FDRs at International Leasing and Financial Services, Avaiva (Reliance) Financial Services and Peoples Leasing and Financial Services. 

As of June 2024, ICB's investment as FDRs are Tk191.60 crore, Tk50.12 crore and Tk25 crore respectively.

The third team led by Mainuddin Ahmed, AGM, will take care of FDRs at Phoenix Finance and Investment, Bangladesh Finance and Prime Finance and Investment. 

ICB's investment as FDRs in three NBFIs are Tk134.75 crore, Tk17.91 crore and Tk7.24 crore respectively, as of June 2024.

The last team led by Nazrul Islam, AGM of ICB, will take care of FDRs at First Finance, ICB Islami Bank and Premier Leasing, which respectively stand at Tk161.09 crore, Tk11.87 lakh and Tk47.24 crore as of June 2024.