M Mostafiduzzaman Aviva Finance Limited, formerly known as Reliance Finance Limited, has drawn up a 5-7 year roadmap to clear its non-performing loan (NPL) burden which is around 35 per cent of the total outstanding credit, said M Mostafiduzzaman, managing director and CEO of the company.
In a recent interview with The Financial Express (FE), he said they are focusing on SME and small loans to recover from the NPL load and go ahead.
The Aviva CEO said their plan is to bring down NPL to single digit within the timeframe.
"We also have to be in the top three of non-bank financial institutions (NBFIs) within this time as well," he said.
The NBFI which was transformed into faith-based financial institution four years back, mainly as a makeover attempt, came in the market leaving behind past of its loan scams.
He said they used to provide loans of Tk500 million to Tk1 billion to one single customer but the company has accumulated such huge amount from so many depositors; such as 500 to 1000 depositors at least.
"So if one loan goes bad we have to suffer huge encashment problem," he said.
Mostafiduzzaman said they will now disburse loans amounting to Tk2.5 to 5 million at the highest, in general, to small borrowers only.
It is mainly because of diverging risks instead of concentrated loans of big risks which they would follow previously, he said.
He said Aviva has appointed very skilled and experienced manpower to recover from NPL.
"We allotted designated persons each bad loan and they are trying to recover," he said, adding that these steps are making results.
The amount of NPL was more than 40 per cent sometime back which is recovering slowly.
He said Aviva is now carries out close monitoring, constant contact with borrowers, monitoring on account registers or cash flow beside other measures taken under legal structure.
He said all loans have not gone bad in the time of PK Haldar, and they are now focusing on recovering those, especially those have mortgage against loans.
He implied that management had involvement in loan scams that shattered Reliance Finance.
"It was impossible for anyone to carry out such scam with the involvement of management," he said.
Anti-Corruption Commission (ACC) found that PK Halder along with his friend Abdul Alim Chowdhury embezzled Tk3 billion from Reliance Finance in loan in the name of fake organisations- NAM Corporation, JK Trade International, Clew Stone Accessories, Verb Metal, and RA Chowdhury Enterprise.
PK Halder, the mastermind of around Tk110 billion banking scam in Bangladesh, fled the country in 2019.
He said the government's instruction to limit deposits from single customer created liquidity crisis for them.
He also said banks and FIs largely suffered from loan rescheduling options set by the central bank.
The CEO said 'public confidence' eroded not only for them but for all banks and financial institutions.
M Mostafiduzzaman said the case of People's Leasing has impacted the entire financial market.
"Had the government taken proper steps in case of People's Leasing, the public trust wouldn't have eroded this much," he said.
He said now government understood the lesson, by not shutting down any banks though many banks are in crisis.
"Instead the government is helping the banks and NBFIs to continue and survive," he said.
He urged the media to not spread panic about banks and financial sectors.
The CEO of Aviva said the Department of Financial Institutions and Markets (DFIM) of the central bank should help non-bank financial institutions like Banking Regulation and Policy Department (BRPD) for the banks.
AVIVA Finance Limited has started shariah-based journey in 2020, which was previously known as Reliance Finance Limited.
Bangladesh Bank permitted the company to operate complying with Islamic Shariah.
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