The Investment Corporation of Bangladesh (ICB) has not been able to recover principal plus interest amounting to more than Tk 9 billion from financial institutions though FDRs kept with them matured five to seven years ago.
Most of the 15 banks and non-bank financial institutions (NBFIs) and ICB’s subsideries, with the payments due, have experienced scams and money embezzlements weakening their ability to pay back. PK Halder is the most infamous of the fraudsters of all responsible for the current fragile status of the institutions.
Now, the recovery of the ICB's funds from these organisations has become a troublesome job. Meanwhile, the institutions have urged the state-run corporation to renew the fixed deposit receipts.
The ICB is unwilling to renew the FDRs because it has not received any payment, including interests, against the investment instruments.
"We could renew the FDRs had they at least paid the interest. The ICB will incur more loss if the schemes are renewed," said Md. Abul Hossain, managing director of the ICB.
Non-realisation of the funds is one of the reasons behind the worrisome situation of the corporation. The ICB has even served legal notices to the organisations for their failure to make repayments.
"Now, the ICB has no way other than filing cases against the companies," Mr Hossain said.
The state-run corporation had secured the funds through loans from other organisations and kept that money with the banks and
NBFIs. So, even if it has not been paid back, it has to pay interest against the loans. Therefore, the cost of funds adds to the loss of principal amounts and interest.
"A significant portion of the company's [ICB's] profits is wiped out by the repayment burden against loans," said the ICB chief.
ICB warned against the FDRs
The auditor in the company's financial statements for FY24 drew attention to the non-renewal of a substantial portion of the matured FDRs.
"The management had not collected the updated FDR statements from the banks and financial institutions as of June 30, 2024," reads the auditor's report.
That could affect the accuracy of the financial disclosures related to investment maturity and balances with these institutions.
"We highlight this matter to provide clarity on the status of these matured FDRs and the corporation's approach to managing these investments," said the auditor.
The ICB receives funds from banks, other financial organisations and the government to support the secondary market. It injects the money into the market and what remains un-invested is kept as FDRs.
The defaulters, which have not paid back
the ICB, include troubled Padma Bank, People's Leasing & Financial Services, Bangladesh Finance & Investment, Premier Leasing & Finance, Fareast Finance & Investment, and International Leasing & Financial Services.
Most of these organisations have been incurring losses.
Bangladesh Finance made a loss of Tk 1.05 billion in 2023 for the first time in five years. Fareast Finance & Investment witnessed a loss of Tk 1.15 billion in the four years through 2023. First Finance has been in the red for the last four years.
International Leasing & Financial Services has been counting losses for the last five years.
Among the defaulters, ICB's subsidiaries owe Tk 0.22 billion to the ICB.
Mr Hossain said the non-payment of funds by the subsidiaries would not be a problem.
"Subsidiaries do get loans from the parent company from time to time. The problem lies with other companies that are not repaying."
Some institutions are paying back at a very limited scale. For example, one has paid Tk 0.05 million when a payment of Tk 50 million is due.
"After taking charge as managing director, I'm trying my best to recover the funds," said Mr. Hossain, adding that they were seeking support from the central bank to recover funds.
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