Janata Exchange Company, Italy is on the verge of bankruptcy due to its continuous operating losses despite various steps taken by the authorities concerned, sources said.
The company, a subsidiary of state-run Janata Bank Ltd, counted an aggregate loss amounting to over Tk 241.81 million (over €2.44 million) in last nine years, they said.
Due to liquidity shortfall, the exchange house might face the bankruptcy proceedings in line with Italian laws. The state-run bank has already taken a two-year action plan to make the entity profitable, they added.
"Losing streak of Janata Exchange Company continues unabated as operational losses from the entity dealing with remittance reached about Tk 242 million during the period from 2009 to 2017," an official said.
It has incurred losses due to a downward trend in the remittance flow and increase in operational costs of the exchange house, he said.
The exchange is still struggling to meet regular expenses.
The exchange incurred an aggregate loss of over Tk 110.50 million between the calendar years 2015 and 2017, according to the data available with Janata Bank.
The losses of the company amounted to over Tk 28.67 million in 2015, over Tk 30.53 million in 2016 and over Tk 51.29 million in 2017, the data showed.
The exchange suffered a loss of Tk 131.31 million from 2009 to 2014 due to increase in income tax, limited network, formulation of new anti-money laundering act and rise in regulatory and compliance related cost, a bank source said.
Janata Bank provided a fund to recoup losses after getting approval from the finance ministry.
The company will face the bankruptcy proceedings due to capital deficit. It will tarnish the image of the country. Urgently, it needs funds to replenish the losses it incurred during the period of 2015 to 2017. The subsidiary of the bank kept necessary provision against losses.
Janata Bank has also sought approval to recoup the loss incurred during the three-year period aiming to continue operation of the company.
The Italian authority concerned starts bankruptcy proceedings in case of more than one-third of capital deficit.
The state-run bank has already adopted a two-year action plan approved by its board of directors.
The bank authority expressed the hope that the agency can be made profitable, if the plan is implemented finally.
Currently, there are two branches of Janata Exchange Company at Milano and Rome in Italy. The company started operation in June 2002. It was a profit-making exchange company between 2002 and 2008.
The Italian regulator is yet to give approval to operation of any agency under the exchange. The application is now pending.
A plan is underway to appoint five agents in 2018 and 35 in 2019 under the action plan.
Janata Bank had default loans to the tune of Tk 97.02 billion at the end of March this year.
The bank runs its business with 912 branches across the country including four overseas branches in the United Arab Emirates having a big family of around 12,939 as of March 2017.
At the end of 2017, the bank held deposits worth Tk 649,440.78 million and advances worth Tk 459,580.05 million. Its authorised capital is Tk 30,000 million and paid-up capital Tk 19,140 million, according to the bank's website.
Despite frequent attempts over phone, Managing Director of Janata Bank Md Abdus Salam Azad could not be reached for his comments in this regard.
© 2024 - All Rights with The Financial Express
