Bangladesh Bank yesterday decided to dissolve the board of directors of the Uttara Finance and Investments over major financial irregularities involving Tk 5,100 crore it had unearthed two years ago. 

The BB officials who are working on the issue said the central bank has already completed all official procedures to dissolve the board in order to protect the interests of depositors.

The BB will send a letter within a day or two to implement the decision, they said.

Last month the central bank sent a letter to the Bangladesh Securities and Exchange Commission (BSEC) requesting it to provide a list of independent directors such that it could appoint them to replace directors in the non-bank financial institution (NBFI).

A BB official said the BSEC has a panel of independent directors and it had earlier appointed some of them in boards of directors of NBFIs which it had dissolved.

In addition, the Uttara Finance and Investments is a listed company, which is why the central bank sought suggestions and a list of independent directors for the NBFI.

The official said the BSEC has already provided the names to the central bank.

The central bank on June 23 removed the managing director of the Uttara Finance and Investments, SM Shamsul Arefin, for his alleged involvement in the financial irregularities.

What Happened in Uttara Finance and Investments?

The BB carried out a probe in 2020 where it found that irregularities involving Tk 5,100 crore were committed by the board and management of the NBFI.

The irregularities were perpetrated during the disbursement of loans and mobilisation of deposits.

The bulk of the loans was given to different concerns of the Uttara Group of Industries. The majority of directors of the group also hold directorship at the NBFI.

Most of the amount was not even shown in the NBFI's financial statement made public in 2019.

For instance, it provided Tk 336 crore in loans to Uttara Motors and other concerns of the Uttara Group of Industries without any credit proposals, breaching banking rules.

The BB found that Mujibur Rahman, a director of the NBFI and deputy managing director of different concerns of the group, was the key person behind the financial scams.

In August 2020, the lender provided vouchers of term-deposit receipts (TDRs) of Tk 236 crore to Bluechip Securities, the managing director of which is Mujibur.

But the vouchers of the TDRs were forged. In reality, the firm did not deposit any money with the NBFI, said the BB report.

The NBFI also concealed the actual amount of term deposits mobilised from clients.

Its financial statement mentioned that the total amount of term deposits was Tk 1,877 crore as of December 2019. But the BB discovered that the actual amount was Tk 2,603.20 crore.

The undisclosed funds of the term deposits to the tune of Tk 726 crore was diverted to other sectors as a part of its effort to help scamsters plunder the money, said the BB probe report.

The lender also employed the same tactic in the calculation of the loans disbursed in its financial statement.

For instance, the total amount of loans provided by the NBFI was Tk 1,877 crore till December 2019 as per its balance sheet. But the BB found that the actual amount was Tk 3,802 crore.

Contacted by The Daily Star yesterday, Matiur Rahman, vice chairman of the NBFI, said the board has not received any directive yet from the central bank about disbanding.

"Some officials, including former managing director SM Shamsul Arefin, were involved in siphoning off funds from the non-bank," he said.

"The NBFI will file a case against the alleged persons soon," he said. No other board member was involved in any irregularities in the NBFI, he added.