In a baffling move, the Bangladesh Bank has asked Premier Leasing & Finance Ltd not to officially release its managing director, Abdul Hamid Mia, although he has submitted a resignation letter.
Mia is one of the persons responsible for the deterioration of the non-bank financial institution's (NBFI) financial health in recent years, as per central bank officials.
Although the NBFI had issued Mia a discharge letter on February 28, the central bank that very day instructed it to backtrack from the decision.
The central bank issued a letter addressing the NBFI chairman, asking not to place any proposal on the release of the managing director without prior approval of the administrator it had appointed.
The BB previously removed managing directors from some banks and NBFIs due to their alleged involvement in scams.
"But this is a rare example in the financial industry as the central bank has asked not to discharge the managing director despite his failure to restore the financial health of the NBFI," said a Bangladesh Bank official with direct knowledge of the matter.
Premier Leasing & Finance has recently faced a wide range of scams, putting an adverse impact on its financial health, he said.
Mia joined the NBFI in 2016 after which its financial health deteriorated by a massive extent.
Its profit stood at Tk 1.96 crore in 2019 in contrast to Tk 14.9 crore in 2016.
Premier Leasing & Finance even failed to repay depositors money despite the fund reaching maturity.
"The central bank will investigate the issue in presence of Abdul Hamid. For this reason, the regulator has taken the decision not to discharge the MD," said the BB official.
As per a court instruction, the central bank appointed an administrator at the NBFI in December last year, the first such move aimed at an NBFI in Bangladesh.
The court order came based on a case filed by one of the NBFI's depositors over its failure to pay back deposits on time.
A number of banks, including Bangladesh Commerce Bank and Janata Bank had earlier deposited money with Premier Leasing & Finance, but it failed to pay back the money despite the maturity of the funds.
Defaulted loans in the NBFI stood at Tk 384 crore as of June last year, which is 31 per cent of the outstanding loans, data from the central bank showed. It faced a provision shortfall of Tk 78 crore as of June.
Contacted, Mia said the board had accepted the resignation letter he submitted on November 30 last year.
"I have also managed a release letter from the NBFI. But the central bank has taken an opposite stance, which is illogical," he said.
"One of a former directors of the NBFI has recently submitted fake allegations against me, claiming that I had been involved in a scam," he said.
The central bank should not take the fake allegations into consideration, he said.
Md Serajul Islam, an executive director and spokesperson of the central bank, said the managing director would have to hand over information in detail relating to assets and liabilities to the central bank's administrator.
"The central bank then will think about whether he will be issued a release letter from the NBFI," he said.