The auditor of Bangladesh Industrial Finance Company (BIFC) issued a warning about the risk facing the business as its key financial indicators have been in the negative for more than a decade.
The cumulative loss of the scam-hit non-bank financial institution (NBFI) is Tk 13.58 billion as of December 2023. Its total liabilities exceeded total assets by Tk 12.02 billion, said its auditor in a qualified opinion published on Monday.
The company's operating cash flow stood at Tk 78.96 million in the negative at the end of 2023, indicating a significant operating cash crunch.
The financial institution also incurred a loss of Tk 263 million in the nine months through September last year.
The NBFI's financial indicators raised doubts over its income generating capacity "unless arrangements are made to increase capital or to improve liquidity position", said the auditor.
The BIFC has remained trapped into a high volume of classified loans, negative capital adequacy ratio, excess liabilities, and swelling losses. More than 90 per cent of total loans disbursed by the company turned sour by the end of 2023.
As per the latest status, the company has failed to keep required provisions due to the high volume of classified loans.
The company should maintain cash reserve ratio (CRR) at a rate of 1.5 per cent on 'Term or Fixed Deposits' but its CRR represents a deficit amounting to Tk 27.66 million as of 2023.
It is also obligated to maintain statutory liquidity reserve (SLR) at a rate of 5 per cent, but SLR represents a deficit amounting to Tk 250.44 million until 2023.
The auditor was unable to verify deposits of Tk 1.86 million out of Tk 35.85 million kept with the Bangladesh Bank due to the absence of proper documentation.
The company also failed to transfer unclaimed dividends worth Tk 4.34 million to the "Capital Market Stabilization Fund" on time, which is a violation of regulations, said the auditor.
The company has been in the red since 2015 and has not paid any dividend since 2014. Its stock fell 2.46 per cent to Tk 7.90 per share on Monday on the Dhaka Stock Exchange.
The auditor also could not verify the value of property, plant, and equipment due to the absence of mutation records, emarcation, and Khajna Roshid.
Company secretary Md. Ahsan Ullah could not be reached for comments.
BIFC is one of the four non-bank financial institutions that fell victim to loan scams committed by Proshanta Kumar Halder, alias PK Halder and his associates.
Moreover, a business group owned by Abdul Mannan, a former state minister, plundered around Tk 10 billion, according to a case statement of the Anti-Corruption Commission.
In a probe in 2016, the Bangladesh Bank found that former BIFC chairman Mannan was largely responsible for the institution's financial woes.
Earlier, a Bangladesh Bank investigation found that PK Halder had siphoned off Tk 5 billion by taking a series of loans from the company under different names. The loans turned sour in 2015.
Stock market analysts said the company had been suffering losses due to irregularities in debt disbursement and huge fund embezzlement while it was once in a good position.
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