The Bangladesh Bank has recommended taking necessary action to ensure that liabilities of e-commerce companies do not go beyond their financial strength jeopardising their existence.
To streamline the rapidly booming e-commerce sector, the government should introduce a proper accounting system for such companies and regularly monitor them through a registered audit firm to see whether they are conforming to it, the central bank said in its inspection report.
In the meantime, the commerce ministry plans to finalise the draft of e-commerce operation guidelines, incorporating three new recommendations in it to protect consumers and formulate policy support to ease the development of the e-commerce sector.
It is also important to stop e-commerce organisations from engaging in unhealthy competition – selling products even at losses only to draw in customers – or from destroying the competitive market environment, the Bangladesh Bank report said.
Besides, there is a need for formulating specific policies and procedures for customer grievance redressal management in the e-commerce sector, the Bangladesh Bank said, adding that it is necessary to define the responsibilities and liabilities of both e-commerce marketplace operators and vendors.
Evaly, which is leading the digital marketplace with its aggressive campaigning, has over Tk403 crore in liabilities to customers and merchants against its current assets worth only around Tk65 crore. Moreover, it also owes an e-value worth over Tk73 crore stored in Evaly’s virtual IDs to customers. As of 28 February, the company had deposits of Tk2.04 crore in its 10 bank accounts, according to the central bank’s inspection report.
The Bangladesh Bank thinks Evaly’s liabilities might be more than what it disclosed.
Despite its being a huge loss-making company, Mohammad Rassel, managing director of Evaly and owner of 40% of the company’s shares, gets a monthly salary of Tk4.5 lakh, while his wife Shamima Nasrin, chairperson of Evaly and owner of its 60% shares, receives a salary of Tk5 lakh a month. The couple also enjoys other benefits, including SUVs, from the company, the Bangladesh Bank reported.
According to information provided by Evaly, it has 626 employees.
The central bank in the course of its inspection observed that growing liabilities have put Evaly’s existence at risk.
Against this backdrop, the Bangladesh Bank has recommended that the commerce ministry conduct an overall audit with an unbiased chartered accountant firm to assess the extent of financial irregularities by Evaly, noting that the e-commerce company’s actual amount of liabilities might be higher than the given data and the company might not sustain itself in the long run with huge liabilities.
As of 14 March this year, Evaly’s losses were 2.33 times its total assets and 213.48 times its share capital, indicating a serious risk for it and a shortcoming of financial management, the central bank said, adding the lack of an acceptable plan to offset such huge losses in the near future could make it impossible for Evaly to survive in the long run.
Meanwhile, the commerce ministry will incorporate three new recommendations –that came through a stakeholder meeting held last Monday – in the draft of e-commerce operation guidelines prior to finalising it, according to sources.
The recommendations include a proposal to the effect that an e-commerce company has to deliver products within 10 days if it takes payments in advance from customers. If companies think that they cannot do so within the specified time, they will have to refund the money within seven days from the date of advance payments, sources at the commerce ministry said.
Without delivering products after taking advance payments, several companies, including Evaly, refund buyers by issuing bank cheques on advance dates. Against this backdrop, it has been decided that buyers will have to be refunded within the stipulated time through using the same payment gateways they have used to pay in advance for products. For example, if buyers pay product prices by using mobile financial services like bKash or Nagad, e-commerce companies will have to refund them the money by using the same system.
If e-commerce companies do not have products, including motorbikes and cars in their warehouses, they will be allowed to take advance payments for those products. They cannot take more than 10% of product prices in advance on conditions of delivering the goods after 10 days or more.
Hafizur Rahman, director general at WTO Cell of the commerce ministry, told The Business Standard, “The e-commerce operation guidelines will be issued very soon, and they will help streamline the e-commerce sector after coming into effect.”
