When one applies for a mortgage from any monetary establishment, the lender has to guarantee that the mortgage software goes by way of at the least 5 layers of scrutiny.
However Uttara Finance and Funding Ltd (UFIL), a non-bank monetary establishment, has not adopted any of the procedures in disbursing an enormous quantity of loans.
For example, it gave Tk 336 crore loans to Uttara Motors and different considerations of Uttara Group with none credit score proposals, breaching the banking guidelines.
The loans weren’t proven within the UFIL’s annual report and the monetary stability sheet to dodge each its stakeholders and Bangladesh Financial institution, a central financial institution probe has discovered.
The BB additionally detected that the UFIL administration created two sections in its digital ledger — “short-term mortgage compensation” and “long-term mortgage” — with out correct authorisation to disburse the loans to Uttara Group.
That is simply one of many examples of its violation of the banking guidelines.
Irregularities involving Tk 5,100 crore had been dedicated by the board and administration of UFIL in disbursement of loans and mobilisation of deposits, the BB present in its probe carried out between October 7 and November 25 final 12 months.
Many of the quantity was not even proven within the UFIL’s monetary assertion made public in 2019.
“The central financial institution is but to search out out the precise amount of cash embezzled from the non-bank monetary establishment as its administration didn’t cooperate with the probe groups, ignoring the banking guidelines,” the BB report stated.
The lender even shut down its servers to stop the investigators from gathering data, in response to the report.
On December 1 final 12 months, the central financial institution requested UFIL to provide explanations for the irregularities.
In response, UFIL despatched two letters to the BB — one on December 15 final 12 months and the opposite on January 5 this 12 months, admitting that irregularities befell on the monetary establishment.
Within the first letter, UFIL Managing Director SM Shamsul Arefin sought 30 working days to provide the BB explanations for the irregularities.
Round three weeks later, he once more wrote to the BB, and stated, “No rationalization is enough in response to the queries concerning the irregularities discovered by the central financial institution investigation and audit. We’re providing you apology with folded fingers and state that such varieties of errors won’t occur sooner or later.
“We would like your cooperation in order that we will run our establishment effectively and easily.”
The majority of the loans was given to completely different considerations of Uttara Group. The vast majority of administrators of the Group additionally maintain directorship at UFIL.
The BB discovered that Mujibur Rahman, a director of UFIL and deputy managing director of various considerations of Uttara Group, is the important thing particular person behind the monetary rip-off. UFIL Chairman Rashidul Hasan and its MD Shamsul Arefin have largely been concerned within the rip-off, in response to the report.
The lender additionally gave Tk 248.68 crore within the type of margin mortgage to its subsidiary firm Uttara Finance and Capital Administration.
The fund was purported to be disbursed to shoppers to assist them purchase shares from the capital market, however UFIL failed to supply the BB with any doc, elevating questions whether or not the loans had been used to take action.
LOAN DISBURSED SANS CREDIT APPLICATION
UFIL disbursed Tk 521 crore to numerous its administrators to buy shares from the inventory market.
However the loans got with out credit score purposes and any discussions at UFIL board conferences, which “jeopardised the pursuits of the depositors to an ideal extent”, talked about the report.
Usually, upon receipt of a credit score proposal from a person or an organization, the department supervisor of a lender has to confirm whether or not the potential borrower has the capability to repay the mortgage. The department then submits the proposal to the credit score committee.
If the fund is bigger than the supervisor’s approval restrict set by the board, the proposal should be positioned earlier than the board of administrators or the managing director.
However UFIL didn’t observe any of the procedures whereas giving cash to the debtors who occur to be its administrators, stated the BB report.
Each the board and the UFIL administration collectively dedicated the irregularities persistently since 2013, it added.
QUESTION OVER TK 890CR
UFIL, which has been working since 1995, gave Tk 1,201 crore to completely different corporations of its administrators, however the administration did it with out UFIL board’s approval.
The UFIL administration created two sections in its ledger — advance and prepayment, and funding in shares — with out correct authorisation to indicate the mortgage disbursements in its register.
The BB discovered that UFIL confirmed solely Tk 311 crore in its 2019 monetary assertion with out explaining the whereabouts of the remaining Tk 890 crore.
Sources stated some UFIL administrators, who maintain directorships of each UFIL and Uttara Motors, had been discovered concerned within the unethical observe.
Although the banking guidelines do not permit a non-bank monetary establishment like UFIL to make money transactions, a considerable amount of funds was given to Rashidul in money underneath the 2 unauthorised sections within the ledger, the BB report stated.
“UFIL additionally didn’t present in its monetary assertion the funds disbursed to Rashidul,” it stated.
Contacted, Rashidul stated he has been unwell for the final 10 months and has not attended workplace in the course of the interval.
“I’m unaware of the central financial institution report on UFIL… I’m not able to remark,” he stated.
FAKE TERM DEPOSITS
In August final 12 months, the lender offered vouchers of term-deposit receipts (TDRs) of Tk 236 crore to Bluechip Securities Ltd. UFIL Director Mujibur is the managing director of Bluechip.
However the vouchers of TDRs had been cast. In actuality, the agency didn’t deposit any cash with UFIL, stated the BB report.
The BB inspection groups had been unable to learn how many faux TDRs have thus far been offered because the UFIL administration declined to supply data.
Apart from, the groups are but to know whether or not BlueChip took loans from different non-bank monetary establishments or any banks by way of such cast TDRs.
UFIL will discover itself in a precarious state of affairs if BlueChip fails to repay the mortgage, the report identified.
EMBEZZLEMENT THRU’ CALL MONEY MARKET
UFIL additionally misused the funds it borrowed from the decision cash market.
Although UFIL borrowed a complete of Tk 397.59 crore from the market until December 2019, it talked about in its monetary assertion that the mortgage quantity was Tk 16 crore.
The interbank name cash market is a short-term cash market, which permits banks and non-bank monetary establishments, to borrow and lend cash at interbank charges.
Such loans are offered for a really brief interval, normally lasting now not than per week, and are sometimes used to assist banks and non-bank monetary establishments meet reserve requirement.
“Mujibur used the funds for private functions in gross violation of the banking guidelines,” the report stated.
UFIL MD’S INVOLVEMENT
UFIL Managing Director Shamsul Arefin has been concerned in siphoning off funds, eroding the curiosity of depositors and different stakeholders of the monetary establishment, in response to the BB report.
He took Tk 24.22 crore from UFIL with out approval from the administration or the board. The quantity was not even talked about within the UFIL’s monetary assertion, and he doesn’t have any mortgage account with the lender, it talked about.
He knowledgeable a BB inspection staff that he had taken the funds from UFIL for his son’s therapy and returned quantity every so often.
In its doc, UFIL confirmed that Shamsul took Tk 6.24 crore from it as of December 2019.
Contacted, Shamsul advised The Day by day Star that UFIL failed to supply data to the BB audit staff in time as he was identified with Covid-19 in September, and Uttam Kumar Saha, the then chief monetary officer of UFIL, died from the virus the identical month.
“I’ve adjusted nearly all of the funds I had taken between 2004 and 2019 from UFIL.”
The excellent quantity is now a most of Tk 58 lakh, he claimed.
He, nonetheless, declined to touch upon the solid TDRs and different related points.
CONCEALMENT OF CREDIT, DEPOSIT
UFIL additionally hid the precise quantity of time period deposits mobilised from its shoppers.
Its monetary assertion talked about that the full quantity of time period deposits was Tk 1,877 crore as of December 2019. However the BB found that the precise quantity was Tk 2,603.20 crore.
The undisclosed funds of the time period deposits to the tune of Tk 726 crore was diverted to different sectors as a part of its effort to assist scamsters plunder the cash, stated the probe report.
The lender additionally employed the identical tactic within the calculation of the disbursed loans in its monetary assertion.
For example, the full mortgage or lease given by UFIL was Tk 1,877 crore until December 2019 as per its monetary stability sheet. However the BB discovered that the precise quantity was Tk 3,802 crore.
The inspection groups did not detect the vacation spot of the undisclosed loans of Tk 1,998 crore because the UFIL administration refused to supply data.
Md Serajul Islam, spokesperson and an govt director of the BB, stated the central financial institution continues to be finishing up investigation.
If proof of involvement of any UFIL official or board member within the rip-off is discovered, punitive measures shall be taken, he stated.
Requested what measures can be taken in opposition to the scamsters, Md Shah Alam, one other BB govt director chargeable for monitoring and making insurance policies for non-bank monetary establishments, declined to remark.
WHAT UFIL, UTTARA SAY
Contacted, Matiur Rahman, vice chairman of UFIL and likewise MD of Uttara Group, claimed that the irregularities detected by the BB are “one-sided data”.
“Irregularities of such magnitude can by no means occur in a monetary establishment. My youthful brother Mujibur has already paid again Tk 308 crore to regulate his earlier loans in compliance with the central financial institution’s directions,” he advised The Day by day Star.
Matiur additionally claimed that Uttara Group had not taken Tk 336 crore loans from UFIL as talked about by the BB in its report.
“This isn’t a mortgage. Uttara Motors acquired the quantity from UFIL upon the maturity of its time period deposits with the monetary establishment.”
The BB ought to crosscheck its findings as soon as once more, and UFIL will definitely observe all of the directions from the banking regulator, he stated.
Requested why UFIL supplied apology to the BB, he stated the lender would run into additional hassle if it didn’t use such phrases.
The Day by day Star contacted Uttara Group a number of instances to speak with Mujibur, however he didn’t reply.