The court also directed that the order be communicated to all concerned immediately.
A general view of Bangladesh High Court. Photo: Collected
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A general view of Bangladesh High Court. Photo: Collected
The High Court has rejected Bangladesh Bank’s application seeking dissolution of the court-appointed board of directors of Peoples Leasing and Financial Services Ltd.
In an order issued on 20 August, the court said the central bank’s application to dissolve the existing board and allow it to proceed against the company under the new resolution framework “cannot be allowed”. The application was disposed of with observations and directions.
The court also directed that the order be communicated to all concerned immediately.
A senior Bangladesh Bank official told The Business Standard that the central bank had been working to resolve several non-performing non-bank financial institutions (NBFIs), including Peoples Leasing.
The central bank had identified five NBFIs as non-viable for resolution under the new framework. However, it could not declare Peoples Leasing non-viable because of the pending court proceedings, the official said.
The High Court’s decision means Bangladesh Bank cannot proceed with its proposed resolution process for Peoples Leasing in the manner it had sought.
Recently, Bangladesh Bank brought four NBFIs under the Bank Resolution framework after declaring them non-viable: Aviva Finance, Fareast Finance and Investment, FAS Finance and Investment, and International Leasing and Financial Services.
Three of the four are listed on the stock market, with their share trading suspended by the exchanges.
The latest ruling follows a petition filed in June by 201 depositors of Peoples Leasing, seeking directives for restructuring the company.
The depositors argued that Bangladesh Bank could take steps to merge or reform the institution but had no legal scope to liquidate it. The High Court subsequently directed that Peoples Leasing be restructured rather than liquidated.
The company became one of Bangladesh’s most troubled financial institutions following the massive financial scam involving Proshanta Kumar Halder, popularly known as PK Halder.
In July, Peoples Leasing disclosed that its board had received expressions of interest from some sponsor shareholders seeking seats on the board.
At a 15 July meeting, the board gave in-principle approval to forward the matter to the High Court Division of the Supreme Court for consideration and appropriate orders in line with existing court directives and applicable laws.
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