Audit reveals Tk287cr provision shortfall, zero FDR coverage at Premier Leasing
In July, the central bank gave Premier Leasing and Finance, including other three NBFIs, three months to regain financial viability.
Premier Leasing & Finance Limited, a publicly listed non-bank financial institution (NBFI), is facing severe non-compliance issues and significant asset-quality risks after its auditor revealed a provision shortfall of Tk287 crore, along with total non-provisioning against its fixed deposit receipts (FDRs).
The auditor's report on the financial statements for 2025 highlighted widespread shortfalls in the required reserves set by Bangladesh Bank across the company's asset categories, which was published on the stock exchanges website today (16 August).
In July, the central bank gave Premier Leasing and Finance, including other three NBFIs, three months to regain financial viability.
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If the institutions fail to meet the conditions, they will also be brought fully under the resolution framework, as per decision.
According to its auditor, Premier Leasing holds Tk1,296 crore loans, of which classified (non-performing) loans account for Tk860 crore and unclassified loans stand at Tk436 crore.
Against the loans, regulatory guidelines required a provision of Tk883 crore, but it managed to maintain only Tk869 crore, resulting in a Tk13.27 crore shortfall.
While against a central bank-mandated provision of Tk105 crore, the NBFI set aside only Tk31.64 crore for other assets, resulting in a Tk73.29 crore deficit.
No provision kept for FDRs
Despite a regulatory requirement to maintain Tk213 crore in reserves against FDR exposures, Premier Leasing maintained zero provisions, leaving the entire sum unbacked.
As per audit report, Premier Leasing has Tk213.43 crore investment in FDR in five non-bank financial institutions.
Of the FDRs, Tk21.55 kept in Bangladesh Industrial Finance Company, Tk53.39 crore in FAS Finance & Investment Limited, Tk71.86 crore in International Leasing and Financial Services Limited, Tk46.97 crore in People's Leasing and Financial Services and Tk19.64 crore in Aviva Finance Limited.
The total investment in these FDRs amounts to approximately 12.04% of the Separate Company's total assets.
Of the five NBFIs, four are under liquidation process as the BB declared non-viable, and the central bank plans to seek Tk2,000 crore from the government's budget.
In its opinion the auditor said, "This reflects a significant uncertainty regarding the recoverability of these investments, especially considering the financially distressed condition and concerning media reports of the respective Institutions. This may result in substantial cash flow constraint and potential financial losses in the coming days."
"On the other hand, the company has taken term deposit receipt (TDR) from FAS Finance & Investment Tk53.39 crore, International Leasing & Financial Services Tk55.82 crore and People's Leasing and Financial Services Tk46.97 crore," the auditor added.
To mitigate the provision shortfall in 2021, Bangladesh Bank approved a deferral facility in 2022. Under this arrangement, Premier Leasing was instructed to absorb and cover the shortfall incrementally over eight years, spanning 2022 to 2029.
In compliance with the scheduled plan, the company allocated Tk164 crore toward its required provision for 2025.
However, the audit pointed out critical operational and compliance shortcomings during the period.
