Uttara Finance MD removed for financial irregularities

The central bank has removed SM Shamsul Arefin, managing director of Uttara Finance and Investments Limited, a listed non-bank financial institution, for his involvement in financial irregularities.

The Bangladesh Bank, in a letter on Thursday, said it took the action after CA firm Rahman Rahman Huq found widespread financial irregularities against the managing director.

The letter said that in order to properly manage the activities of the institution, it was directed to take action in accordance with the policies on appointing the chief executive of financial institutions.

A senior official at the central bank said the Bangladesh Bank has taken action against the wrongdoer only after thorough scrutiny. However, investors will not face any problems due to the action.

He added the institution's directors had taken loans without approval. They embezzled money in various ways. There are mismatches in loan-deposit information. The company was taking time to provide its financial report showing various excuses. Later, the central bank was compelled to appoint an auditor in Uttara Finance to find out the irregularities.

Earlier in 2018, Uttara Finance had sent incorrect information to the central bank's Credit Information Bureau (CIB) regarding the loans of three customers. The central bank fined the NBFI Tk5 lakh for providing false information. Later, the Bangladesh Bank rejected the request for a waiver of the fine.

This correspondent phoned SM Shamsul Arefin for his comments on this matter but he did not answer the call.

Meanwhile, a special inspection of the central bank has found evidence of the Uttara Finance scam. Multiple directors and the managing director of the institution took loans without the approval of the central bank. In addition, it hid documents to conceal the details of many of their transactions.

Due to these irregularities, the Bangladesh Bank had directed Uttara Finance to amend its financial statements for 2019 and 2020. But so far the firm has not been able to submit that report.

At the end of March 2021, Uttara Finance and Investments Limited had total outstanding loans of Tk2,732 crore. Of this, the amount of defaulted loan was Tk418 crore which is 15.33% of the total debt.

However, at the end of March this year, its outstanding loans decreased to Tk2,360 crore. The amount of defaulted loans has increased to Tk993 crore which is 42.10% of the total loans. The institution's defaulted debt has increased by 26.77% in one year.

The institution has more than 13.14 crore in the capital market. Its shares were traded at Tk35.40 per share on Thursday, which was Tk34.90 on the previous day. 

It has not given dividends to its shareholders since 2019. In 2019, the institution had paid 15% cash and 5% stock dividends.