The Bangladesh Bank (BB) has once again dissolved the board of Uttara Finance and Investments, just six months after reconstituting it, and appointed an administrator to the crisis-hit non-bank financial institution (NBFI).Subscribing To Premium
The central bank abolished the five-member board on Tuesday under Section 20(1) of the Financial Company Act, 2023, according to a stock exchange filing on Wednesday.
At the same time, former Bangladesh Financial Intelligence Unit (BFIU) director Mostaqur Rahman has been appointed as administrator at the NBFI.
The latest intervention came after four directors, including the company’s chairman and managing director (MD), resigned simultaneously amid an internal clash, raising fresh concerns over the NBFI’s governance.
The disclosure did not specify the grounds for dissolving the board. However, the move comes against the backdrop of a long-running financial crisis, governance problems and internal disputes at the company.Downloading Interactive Geographic
An official of the company, requesting anonymity, said the directors were reportedly forced to resign due to “unethical pressure” from a particular group.
In February this year, the central bank reconstituted Uttara Finance’s board, deploying four independent directors and the chief financial officer (CFO) of Uttara Group.
The company’s financial problems have been under regulatory scrutiny for several years, and the central bank has previously taken steps to overhaul its governance.
The BB had first dissolved the company’s board in 2022 following allegations of irregularities, including misuse of depositors’ money. It also removed five directors linked to Uttara Group, the company’s sponsor, in December 2022.
Despite the disclosure, Uttar Finance’s stock closed at Tk 13.30 on Wednesday, gaining 0.76 per cent over the previous day.
Deepening financial crisis
Uttara Finance has been grappling with severe financial and governance problems for several years.
The distressed NBFI restated its 2019 financial statements in July this year, reporting a loss of Tk 3.08 billion against a previously reported profit of Tk 1.18 billion. The revelation followed a central bank-ordered forensic audit that uncovered widespread irregularities in the company’s accounts.
The NBFI also disclosed a loss of Tk 4.7 billion in 2020 and a loss of Tk 3.1 billion in 2021.
Investors are yet to receive the company’s financial results for 2022-2025.
The company’s audited financial statements for 2021 also showed a Tk 9.05 billion shortfall in minimum regulatory capital.
According to the auditor’s report, Uttara Finance’s eligible capital stood at negative Tk 3.29 billion against the required capital of Tk 5.76 billion based on its risk-weighted assets.
The company’s capital adequacy ratio (CAR) also stood at negative 5.72 per cent, against the regulatory requirement of 10 per cent.
The auditor also raised questions over transactions involving loans, advances, leases and other assets, saying it could not obtain sufficient appropriate audit evidence for several significant transactions.
