Crisis-hit People's Leasing seeks Tk 7.5b stimulus from govt for revival

Crisis-hit People's Leasing and Financial Services Ltd (PLFS), a non-bank financial institution (NBFI), has formally sought a financial stimulus of Tk 7.50 billion from the government to complete its restructuring process and resume full-scale operations.

In a letter sent to the Ministry of Finance, the company outlined a comprehensive 'revival plan' aimed at safeguarding depositors' interests and restoring confidence in the troubled NBFI sector, according to sources.

The company said the proposed financial support would help bridge the gap between its recoverable assets and outstanding liabilities, enabling it to complete the court-supervised reconstruction process.

People's Leasing has been embroiled in a severe liquidity crisis and financial irregularities during the 2003-2014 period, which eventually prompted the High Court to order its liquidation.

However, in July 2021, the apex court stayed the liquidation order, and constituted a new board of directors to facilitate the company's restructuring under judicial supervision.

Since then, the new management claims to have made notable progress in stabilising the troubled lender.

According to the company, approximately Tk 2.0 billion has been recovered from defaulting borrowers since July 2021, and around Tk 840 million has already been repaid to nearly 1,900 depositors.

As part of cost-cutting measures, the company shifted its head office to a self-owned floor in Purana Paltan, saving nearly Tk 1.0 million per month in rent

It has also cleared a backlog by holding seven pending annual general meetings covering the years 2019 through 2025 to ensure regulatory compliance.

To complete the turnaround process, People's Leasing has proposed several restructuring measures alongside the government support. The measures include converting existing liabilities into interest-free principal payments over a specified period, exploring the conversion of depositor claims into company equity, and restarting SME and collateral-based lending to generate fresh revenue.

The company has also proposed confiscating shares held by former directors allegedly involved in past financial irregularities, and reissuing them to new investors.

In the letter, PLFS Managing Director Md Sagir Hossain Khan said the primary objective of the revival efforts is to ensure protection of public deposits under the supervision of the High Court and the Bangladesh Bank.Bangladesh market research

"To transform the institution into a profitable and functional entity in the public interest, a financial assistance of approximately Tk 7.50 billion is essential," the letter reads.

If the proposed stimulus is provided, the company plans to normalise its operations by 2026, including maintaining the mandatory cash reserve ratio (CRR) and statutory liquidity ratio (SLR) with the central bank, signalling a return to regular financial activities.

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