More than a year after the restructuring of the board of directors, scam-hit FAS Finance and Investment is yet to become functional again.
Overburdened with loss and bad loans, it is in another uphill struggle to raise Tk 3-4 billion to restart giving out loans.
If that could be done, alongside a recovery of bad loans, FAS Finance would be able to "gain back investors' confidence", said new Chairman Mohammed Nurul Amin.
"The main challenge of the new board is to restore depositors' confidence," he said, adding that the required fund can be collected through equity, bonds or any other form of securities.
FAS Finance & Investment Ltd had turned into a non-functional organisation after a scam of Tk 13 billion. The money had been swindled by Proshanta Kumar Halder, former managing director of the International Leasing and Financial Services Ltd, and his associates.
At the end of 2014, a syndicate led by Halder purchased shares to gain control over the financial organisation. They then fired the existing employees and hired people who would serve their interests. The directors of the board were also replaced.
In an investigation years later, the Anti-corruption Commission found that 20 of the 22 companies that had taken out loans without any mortgage existed only on paper. The remaining two companies had already been shut down by the time the probe began last year.
Halder and his associates had transferred the borrowed funds to their accounts.
Since the FAS Finance has no asset mortgaged against the loans, getting the money back is unlikely.
The collection of new funds will be difficult too.
Mr Amin said the company had continued its search for new sources of funds.
The governance and the IT platform have been strengthened so the new board can restart operation. "We have recovered bad loans equivalent to Tk 500 million and rescheduled SME loans," he added.
However, the entangled non-bank financial institution has not yet increased the stake of sponsor directors up to 30 per cent, as required by the regulatory body of the stock market.
As of November 30, 2022, the stake was down at 13.20 per cent.
That indicates the depth of the fund crisis that the NBFI has been facing to become functional again.
This is the backdrop to the company's share price hovering between Tk 5.0 and Tk 6.70 each between July 19 and August 7.
The stock declined to Tk 5.50 on September 26, having lost 18 per cent from August 7.
Afterwards, the price came down to its floor at Tk 5.40 on October 17. The shares were traded at the same price in the sessions through Thursday.
The existing shareholding portion of the sponsor-directors has been frozen, said Mr. Amin, also the former managing director of NCC Bank.
So, to increase the stake, the company has to find new investors.
Meanwhile, its accumulated loss stood at Tk 6.80 billion and liabilities exceeded the value of assets by more than Tk 4.96 billion at the end of 2021, according to the latest audit report.
Loss per share jumped 87.75 per cent to Tk 4.60 for the July-September quarter of this year, compared to the same quarter last year.
Managing Director of Midway Securities Md. Ashequr Rahman said the FAS Finance had produced positive financial reports year after year when the company was actually performing badly.
"Investors can consider the disclosures made after the restructuring of the board more accurate. But, the extent of the accuracy will depend on the new board, and the securities regulator should tighten its monitoring."
Investors should also attend the annual general meetings to raise their voices, Mr Rahman added.
The auditor of the FAS Finance said in its qualified opinion that the company should maintain cash-reserve ratio (CRR) at 1.5 per cent of term or fixed deposits.
"We physically visited a number of properties mortgaged against loans, the control of which had been seized by the Anti-corruption Commission. As a result, we are in doubt about the right to sell these properties," said the new chairman of the FAS Finance.
Moreover, rents from those properties are not being collected by the company, he added.
In such a circumstance, the newly-restructured board nominated by the Bangladesh Securities and Exchange Commission (BSEC) is striving to implement multiple business plans for the revival of the company, said Chairman Mohammed Nurul Amin.