People's Leasing back on DSE after 4 years

Infograph: TBS

People's Leasing and Financial Services, a troubled non-bank financial institution (NBFI), is set to resume trading its shares on 10 March under the Z category as the Dhaka Stock Exchange (DSE) has lifted trading suspension after more than four years.

The decision was made by the board of the DSE on 6 March, as stated in the country's premier bourse's announcement yesterday. 

In July 2019, the DSE halted trading of the NBFI's shares to safeguard investors' interests, prompted by the initiation of a liquidation process due to the company's declining financial condition.

DSE Managing Director ATM Tariquzzaman told TBS, "People's Leasing was previously heading towards liquidation but the central bank has now confirmed that liquidation will not proceed."

The share price of People's Leasing stands at Tk3 on the DSE.

Tariquzzaman also said the company has restored its regular practices, including conducting annual general meetings (AGMs) and disclosing audited financial reports. Therefore, there is no longer a necessity for share trading suspension.

Last December, the company devised a strategy for its revival, intending to change its name and rebrand as Sonar Bangla Lease Finance PLC to shed its negative image. However, the Bangladesh Bank has declined the company's proposal to change its name, citing ongoing legal proceedings in court.

Hasan Shaheed Ferdous, the court-appointed chairman of People's Leasing and Financial Services, told TBS, "In response to the High Court's directive, we are taking steps to reinvigorate the company. As part of our strategic revitalisation plan, we have been granted permission to recommence trading the company's shares.

"We have reached out to both domestic and international investors to secure funding for the company. However, they expressed apprehensions due to the suspension of share trading. Now, we have met the conditions stipulated by the Bangladesh Securities and Exchange Commission to lift this suspension order."

The chairman added, "We have yet to receive an official investment proposal from any business entity, but we are actively engaging with various potential investors. We recently held discussions with Blue Ray, a Dubai-based company. With the resumption of share trading for the company, interested parties can now purchase shares and potentially become stakeholders in the company."

How People's Leasing landed in a quagmire

The NBFI found itself in deep water when Prashanta Kumar Halder, often referred to as PK Halder, embezzled around Tk3,500 crore from numerous financial institutions, including People's Leasing.

Following this, the company initiated its liquidation process in April 2019, after its board notified the central bank of its inability to repay depositors upon maturity.

However, in July 2021, the High Court intervened and revived hope for the struggling NBFI by reconstituting its board of directors, thereby preventing the company from undergoing liquidation.

The board appointed by the High Court for People's Leasing has put forth various strategies to revive the NBFI, such as securing new capital through partnerships, recovering loans, and effectively utilising its assets. 

Revival is rare

It is noteworthy that instances of rebounding from financial challenges are uncommon in Bangladesh. A notable exception is the Bank of Credit and Commerce International (BCCI), which successfully revitalised itself by rebranding as Eastern Bank.

Moreover, Oriental Bank underwent a transition to become ICB Islamic Bank, and Farmers Bank was renamed Padma Bank. However, these institutions are still grappling with the challenges and have not fully overcome them.

People's Leasing Chairman Hasan Shaheed Ferdous said, "We embarked on the restructuring journey of People's Leasing from the moment we assumed our roles. We have now started to witness profitability. If this positive trajectory persists, we anticipate improvements in the future." 

He continued, "In early 2022, we initiated the restructuring process after receiving Tk32 crore from the liquidator appointed by the Bangladesh Bank. Subsequently, Tk150 crore was obtained from banks, marking the commencement of reconstruction efforts with this capital."

The chairman also mentioned that a portion of the funds has been invested in Fixed Deposit Receipts (FDRs) in banks, while some funds remain in the company's bank accounts. 

"On average, about Tk3 crore is being recovered from borrowers each month, and we are using this money to repay depositors. There is no longer any concern about not receiving your funds from People's Leasing. We are actively reimbursing customers, and we have also initiated the provision of home and car loans," he added.

According to data from People's Leasing, it has recovered Tk101 crore from borrowers and returned Tk37.53 crore to 2,053 depositors till 27 December 2023.

In December 2021, the company's total deposits stood at Tk2,661 crore, and total outstanding loans amounted to Tk1,211 crore.