NRB Commercial Bank is in trouble in getting its IPO (Initial Public Offering) proposal approved by the stock regulator due to its non-compliant directors in terms of holding required shares.
The bank has filed its documents with Bangladesh Securities Exchange Commission (BSEC) mentioning 11 directors. Of them, two directors hold less than 2% shares.
According to BSEC rules, a director of a company must hold a minimum 2% shares for IPO approval. However, NRB Bank's two directors Mohammed Manzurul Islam and Dr Nuran Nabi hold only 0.23% and 0.45% shares of the company, respectively.
The bank wants to raise Tk120 crore from the capital market following the fixed price method.
The bank will use Tk110 crore of this fund in government securities, Tk6.05 crore for investing in the secondary market and Tk3.95 crore as IPO expenses.
Meanwhile, a sponsor shareholder has filed a complaint with the BSEC and the Ministry Of Finance, seeking immediate initiative to prevent IPO approval keeping these two individuals as directors.
Sources at the BSEC said the bank must comply with the 2% minimum shareholding rule. The commission will seek explanation in this regard, they added.
Md Samsul Haque, managing director of Asian Tiger Capital Partners Investments Limited and also the issue manager of the bank, told The Business Standard, "The two directors holding less than 2% shares resigned from the bank in its last board meeting."
Claiming that the bank has already unofficially informed the Dhaka Stock Exchange about their resignation, he said, "We will formally inform the commission and the stock exchanges of this very soon."
In his complaint, the sponsor shareholder mentioned, "The bank has 24 shareholders having more than 2% shares who are qualified, experienced and acceptable in all respects. But the bank is not replacing the two unqualified directors with shareholders having eligibility to become directors."
The sponsor director said, "According to Bangladesh Bank rules, 17 directors are to be appointed from among the shareholders and 3 independent directors from outside.
"But the current chairman wants to run the bank with 11 directors and 1 independent director to maintain his monopoly power and continue the irregularities. This is genuinely an obstacle to good governance."
He argued, "If good governance does not return to the institution, the bank will face a great risk at any time."
The Business Standard repeatedly tried to contact the managing director of NRBC Bank over the phone, but he did not pick up the phone.
According to an audited report of the year ending on 31 December 2019, the bank's net profit was Tk115.36 crore.
And in the January-June period of this year, the bank's net profit was Tk36.21 crore. During the period, its net interest income was Tk81.38 crore, investment income Tk95.42 crore, and total operating income Tk228.42 crore.
The bank's authorised capital was Tk1,000 crore while the paid-up capital was Tk582.52 crore and the post paid-up capital was Tk702.52 crore.
Asian Tiger Capital Partners Investments Limited and AFC Capital Limited is the issue manager of the bank.
The bank was launched on 20 February 2013 and started operation on 2 April in the same year.
The bank has 75 branches, 42 sub-branches, 23 BRTA collection booths, 13 land registration sub-branches, 229 land registration booths, and 583 agent banking partners across the country.
The principal activities of the bank are banking and related activities including accepting customer deposits, lending to retail, small and medium enterprises (SMEs) and corporate customers, foreign trade business, lease financing, project financing, inter bank borrowing and lending and dealing in government securities and equity shares etc.