The BB letter also directed for the immediate appointment of a new MD to ensure the smooth and responsible operation of Phoenix Finance
Citing breaches of lending regulations, the Bangladesh Bank removed Intekhab Alam, managing director of the non-bank financial institution (NBFI) Phoenix Finance and Investments Ltd, from his post.
Additionally, the central bank restricted foreign travel for several officials of the NBFI connected to the irregularities.
The central bank spokesperson Mezbaul Haque told TBS that the central bank sent a letter to the chairman of Phoenix Finance on Thursday.
According to the letter, Intekhab Alam was found to be involved in the loan irregularities, which hampered depositors’ trust. Therefore, Intekhab Alam was ordered to be temporarily suspended from the position of the MD and reassigned to the human resource department of the organisation.
The letter also directed for the immediate appointment of a new MD to ensure the smooth and responsible operation of Phoenix Finance.
This decisive action underscores the Bangladesh Bank’s commitment to safeguarding financial stability and protecting depositors’ trust, said central bank officials.
A senior official of the central bank said the Bangladesh Bank conducted a special inspection on Phoenix Finance recently. The inspection unveiled widespread irregularities across various levels of the organisation, including loan mismanagement and delinquent repayments to depositors, with Intekhab Alam implicated among others.
Loan irregularities at Phoenix Finance involving borrower companies – SA Oil Refinery and Aman Cement Mills Unit-2, Monospool Paper Manufacturing Company, Mahin Enterprises Limited, Mc Steel Industries – along with individual borrowers – Najma Parveen and Farhan Musharraf – have prompted the central bank to order Phoenix Finance to conduct a thorough internal investigation and take decisive administrative and legal action against those implicated, said the letter.
Phoenix Finance in losses
Phoenix Finance’s total loan portfolio reached Tk2,699 crore by the end of March 2023, with a worrying 35.83% (Tk967 crore) of loans in default, according to central bank data.
The company incurred a loss as gigantic as Tk80.61 crore in the April to June quarter of 2023, which was 69 times the loss incurred in the same quarter the previous year.
In the second quarter of 2022, the NBFI turned a loss of Tk1.16 crore.
In this year’s April to June quarter, the company’s loss per share stood at Tk4.86, which was Tk0.07 a year ago.
In the first half of 2023, the net loss stood at Tk 223.43 crore, which was a profit of Tk0.17 crore in the same period of 2022. Net operating cash flow per share stood at a negative Tk1.53.
Phoenix Finance’s shares are stuck at the floor price of Tk16.30 on the Dhaka Stock Exchange.
Phoenix Group of Industries and Pakiza Group dominate the company’s board of directors.
As of 31 August 2023, sponsors and directors jointly held 30.51%, institutional investors 23.63%, and the general public 45.86% of the company’s shares.
