International Leasing and Financial Services Ltd, devastated by the 2015-2019 board of directors working for alleged "bank looter" PK Halder, saw its core capital sink to minus Tk3,081 crore, while the central bank requires it to be Tk277 crore.
The statutory auditor in its 2021-end report raised the red flag of the Tk3,358 crore capital shortfall the firm incurred mainly due to the huge provisioning against its non-performing loans (NPLs).
Also, the auditor in its report informed the users of the financial statement that International Leasing should have kept over Tk23 crore in the Bangladesh Bank as a cash reserve ratio, while it could maintain only 0.08% of the figure.
With such huge shortfalls, stuck funds in bad loans and the inability to pay back depositors and lenders, the non-bank financial institution's ability to continue as a going concern is subject to the auditor's doubt.
Due to the loans disbursed without due diligence during the PK Halder-influenced board, International Leasing's NPLs now stand at 76%. The auditor also said the company showed some fake deposits over the period.
However, the new management under the court-appointed board is trying to recover assets, observed the auditor.
International Leasing has already secured the Bangladesh Bank's approval to convert its Tk2,491 crore liabilities to depositors and lenders into equity which would help the firm reduce its capital shortfall.
If the firm, securing the capital market regulator's approval and the depositor-lenders' agreement, succeeds in the planned over Tk2,000 crore equity conversion programme, the need for core capital would drop alongside an increase in paid-up capital.
With the reduced deposits, the mandatory cash reserve ratio also may come down to offer the firm breathing space.
International Leasing officials expressed their hopes to bring back operational normalcy by the end of 2023 if they succeed in the equity conversion plan.
However, following a clerical mistake regarding its latest net asset value per share, International Leasing shares hit the top circuit breaker at Tk6.6 on Sunday on the Dhaka Stock Exchange.
As the bourse does not allow any stock to soar by more than 10% a day, International Leasing shares had no sellers at Tk6.6 during the closing session.
At the end of June 2022, International Leasing's net asset value per share dipped to negative Tk157.4, while both the Dhaka and Chattogram bourses disclosed the figure as positive.