History of People's Leasing & Financial Services:

People’s Leasing and Financial Services Limited (PLFS) is a financial institution established
within the ambit of Financial Institutions Act-1993 and was incorporated as a Public Limited
Company under Companies Act-1994 on August 12, 1996. Company obtained license from
Bangladesh Bank on November 24, 1997 to carry on lease finance business. Authorized
Capital of the Company is Tk. 500 million divided into 50 million ordinary shares of Tk. 10/-
each while Paid-up Capital as on September 30, 2017 stands at Tk. 285 million subscribed by
the sponsors.

Management Structure:

Independent
Director

Managing
Director & CEO

Senior Executive Vice EVP & Chief Financial

President Officer

SVP, Head of SVP & Head of

Senior Vice SVP, Head of
Corporate & Liability
President Gulshan Branch
Treasury Marketing

AVP, Head of
Company VP & Head of
SAVP, ICCD Chittagong
Secretary Accounts
Branch

Figure: Management Structure of PLFS

Reasons for Liquidation:

The government has directed the central bank to liquidate People’s Leasing and Financial
Services (PLFS), a non-bank financial institution, due to deterioration of its financial health
in the last several years. If the liquidation goes through in line with the Financial Institutions
Act, 1993, it will be a first in Bangladesh’s financial sector. Liquidation of PLFS means
closing its operations permanently and the government will take actions to settle liabilities by
selling off its assets. But the central bank as the regulator has to take approval from the High
Court before liquidation. Earlier on June 27, the finance ministry instructed the central bank
to shutter the NBFI for its failure to improve its conditions, said Asadul Islam, senior
secretary of the banking division. The ministry arrived at the decision after going through a
detailed central bank report on the NBFI. The NBFI has failed to repay the depositors’ money
despite maturity of the funds, found the Bangladesh Bank report. Default loans and net losses
have recently escalated as well. Sami Huda, managing director of PLFS, however, said the
central bank is yet to take a call on the NBFI’s liquidation.

The NBFI’s problems came to the surface in 2013-14, when some of its directors made off
with more than Tk 1,000 crore by way of submitting fake documents, according to the central
bank inspection report. In 2015, the central bank had removed five directors for their
involvement in the financial scandal. But it was not enough. Since then the bank has been on
a downward spiral. For instance, in the first nine months of last year PLFS’s operating
expenses stood at Tk 22.48 crore against the operating income of Tk 2.05 crore. PLFS
sometimes failed to pay the wages to its employees because of the severe liquidity crunch,
some officials told this correspondent. Last year, to get deposits the NBFI offered more than
12 percent interest rate, when many other lenders were paying the highest of 6-7 percent, said
a BB official. Sources said some banks and other NBFIs and public have Tk 2,000 crore as
deposits with PLFS. If PLFS is liquidated, depositors and shareholders may not get their
money back. Latest data shows, nearly 68 percent shares of the NBFI is with the public and
23 percent with sponsors and directors.