Union Capital MD barred from joining Islamic Finance
The central bank has asked Islamic Finance and Investment Ltd (IFIL) not to recruit Chowdhury Manzoor Liaquat as its managing director.
Liaquat is now currently serving Union Capital, another non-bank financial institution, as its managing director.
The central bank has taken the decision as the financial health of Union Capital deteriorated under the leadership of Liaquat.
Islamic Finance and Investment in September requested the central bank to inform it whether it had any objection to the lender hiring Liaquat. The BB gave its reply on December 21.
The central bank instead asked the NBFI to recruit a transparent and qualified person for the post immediately.
Officials of the BB said Union Capital was now facing a lack of corporate governance and Liaquat was one of the persons responsible for its current state.
The central bank has recently unearthed that Union Capital had waived loans given to a subsidiary of the NBFI. The total outstanding loans extended to the subsidiary stood at Tk 500 crore.
"Waiving a loan is a gross violation of banking norms as it reduces the asset of a lender. Union Capital has followed the practice that is eroding its capacity to repay depositors," said a central bank report.
With Union Capital repeatedly failing to repay depositors despite their funds reaching maturity, the BB ordered the NBFI on November 3 not to disburse any loans exceeding Tk 1 crore.
Up until June, default loans at Union Capital stood at Tk 130 crore, which is 11 per cent of its outstanding loans. But BB officials say the actual amount of bad loans might be higher.
It also faced a provision shortfall of Tk 19 crore.
Liaquat told The Daily Star yesterday that Islamic Finance and Investment had made the offer to him to take up the post.
"I have accepted the offer. But, it is not possible to join Union Capital as the central bank has not given the permission," he said.
Liaquat joined Union Capital as deputy managing director in February 2018 and was subsequently promoted to the position of additional managing director in January 2019.
He was appointed managing director in October 2019.
Central bank officials said Liaquat had submitted a resignation letter to Union Capital in October, which would come into effect on December 31.
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