Khan Mohammad Moinul Hasan became the chairman of the Board of First Finance Limited at the end of 2021 as an independent director. From 2020 to September 2021, the company has incurred huge losses. Besides, the company was unable to repay depositors due to defaulted loans and cash shortages.
In an interview with The Business Standard correspondent Ahsan Habib Tuhin, Khan Mohammad Moinul Hasan spoke in detail about the reasons for the company's losses and its plans to turn around.
Why did you take the helm of a company that has been posting losses?
Everyone wants to take responsibility for a good organisation. But, if a company turns good from bad then a positive image of it is created in society. I think if I can improve the company's condition by 1% then I will consider myself successful. Moreover, I have no experience of working as a director. So I took the responsibility as a challenge.
What made First Finance a loss-making company?
There are many reasons behind the poor condition of the company, but two among them are conspicuous – the negligence of former boards and the lack of good management. Debt collection has become difficult due to the lack of proper collateral against loans. Besides, the amount of defaulted loans has increased as the company could not recover them on time. On the other hand, high-interest deposit funds have increased the cost of funds. So the company has been suffering from a financial crisis as well as posting losses.
You see, a company will not function well if only one of the two – the board and the management – works properly. Both of these two must have an interest in performing well. The companies where these two did not work well are in the same situation as First Finance is in today.
What did you focus on after assuming office?
Immediately after taking charge, I insisted on appointing a good and qualified managing director for the company. We got Mohammed Mosharaf Hossain, former additional managing director of the Uttara Bank, as the managing director after publishing two advertisements for recruitment.
He wanted to resign after joining when he saw the condition of this company. But he stayed on our assurances and the advice of the Bangladesh Bank. I told him both of us would resign if we could not improve the condition of the company.
What steps have you taken to recover the debts?
We have sent a strict message to the borrowers so that they pay the loan interest on time. We said the interest on the loans will not be waived under any circumstances and the names of those who do not pay it will be sent to the Bangladesh Bank to enlist them as loan defaulters. Consequently, many of the borrowers have started repaying instalments regularly. Our loan recovery has more than doubled last December compared to that time in the previous year.
A good thing about our company is that none of the directors has taken any loan. It is difficult to recover loans taken by the directors.
What other steps have you taken?
Absolute power invites corruption. So no individual entity in my company has the power to act on its own. Currently, the board makes all the decisions. For example, crores of taka have been misappropriated in this company in the name of the commission. After realising this, I gave the responsibility of determining the commission to the board. Currently, no one can take commissions against the deposit at their whims. Even the managing director cannot determine the commission on his own.
What is the status of the company now?
Our situation has improved as loan recovery increased. Currently, we are refunding the fixed deposits below Tk10 lakh. Besides, we are regularly paying interest to the big depositors who were previously not getting any money back. We are in the process of recovering some large amounts of defaulted loans. Once they are realised, the company will turn around.
What action has the company taken against those responsible for this condition?
We are working on those who are responsible for this situation. I will not say anything about it now. We are handling the matter cautiously as per the company rules and regulations.
Any message for ordinary shareholders?
I have been in charge of the company for one year and only six months have passed since we got a managing director. The new managing director has taken care of everything in just three months. Now is the time to move forward. Hopefully, by the end of this year, the shareholders will see improvements in the company.