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Approx Tk 54,100cr loan irregularities found in 4 banks

01 December 2022

Staff Reporter :
Some state-owned and private banks are violating the rules and regulations of the banking sector and issuing big loans against unverified and unreliable companies or firms.
The Central Bank has unearthed irregularities of approx Tk 54,100 crore loan irregularities between 2009 and 2022 in four banks viz. Islami Bank Bangladesh Limited (IBBL), Social Islami Bank Limited (SIBL), Sonali Bank and BASIC Bank, which has pressed the 'red bell' the banking sector.
Economists believed as proper investigation was not done and tough actions were not taken in time against the guilty, waves of irregularities jeopardized the banking sector.
The incidents of loan scam have been going on frequently in the banking sector, but concerned stakeholders said that absence of rigorous action against the responsible persons always encourage others to engage into such malfeasance.
The latest incident of issuing 'suspicious loans' has taken place with the Islami Bank which provided Tk 6,835.5 crore loans to eight companies between April 25 and November 17.
The figure has reached Tk 7,246.54 crore together with interests, according to a Bangladesh Bank report.
The bank sanctioned Tk 2,460 crore just between November 1 and November 17, which were abnormal, experts said.
Chattogram-based S Alam Group has lifted a stupendous sum of money in loans - more than Tk 30,000 crore - from Islami Bank Bangladesh Limited that the business group controls.      S Alam group received Tk 12,120 crore loans from the IBBL's Khatunganj branch, Chattogram in the name of its six companies, according to the BB audit report.
Of them, S Alam Refined Sugar took Tk 4,000 crore, S Alam Super Edible Oil Tk 2,780 crore, Sonali Trading Limited and S Alam Vegetable Oil Limited Tk 2,780 crore, S Alam Cold Rolled Steels Tk 1,350 crore and Century Flour Mill Tk 1,250 crore, according to the BB findings.
Besides, the group was awarded Tk 2,890 crore credit against seven other of its concerns that included Aramit Limited, Unitex Composite Spinning, Unitex LPG, HIP, Sunmoon Enterprise and Adil Enterprise, without the compliance with usual requirements regarding security and documentation, the audit team said.
Besides, additional Tk 12,000 crore loans were availed in the name of the above seven companies beyond the formal limit without any formal sanction by EC/board, the BB report disclosed
The SIBL is facing losses of about $1.6 billion after allowing two companies to import goods for years using letters of credit that turned rogue.
Bangladesh Bank carried out an investigation and revealed that Gazipur Sharp Knitting and Dyeing Industries did not renew the licence for its bonded warehouse for years, yet it was allowed to open back-to-back LCs.
Gazipur Blithe Fashions Ltd opened 350 back-to-back LCs and imported $5.5 million in raw materials without having any bonded warehouse.
The companies did not export goods that were supposed to be produced with imported materials. Central bank officials did not find the goods, which can match the imports, in the firms' warehouses during an inspection.
Now SIBL is liable to pay for the imports of goods worth around Tk 160 billion.
On the other hand, the Hallmark Group is one of the biggest debt scandals in the banking history of Bangladesh.
Between 2010 and 2012, the company embezzled Tk 2,731 crore from the then Ruposhi Bangla Hotel branch of the state-owned Sonali Bank.
According to Sonali Bank's audit and inspection report, Hallmark Group had used 42 different companies to withdraw the entire amount from the bank.
According to a Bangladesh Bank enquiry, around Tk 4,500 crore was siphoned off BASIC Bank between 2009 and 2013 when Sheikh Abdul Hye Bacchu chaired the board of the bank.
Experts of the banking sector said that when big loans are sanctioned, it requires the permission of the board and such loans must go through strict checking at several stages.
Following the incident of Islami Bank, the Central Bank has begun an investigation into Islami Bank for disbursing Tk 7,246 crore in loans to nine companies this year grossly violating banking rules.
"It's really a catastrophic signal for the whole banking sector when we see loan irregularities in banks like IBBL, the largest private bank of the country," former lead economist of the World Bank's Dhaka office Zahid Hussain said.
The government and the Bangladesh Bank, the guardian of the banking sector, must take quick steps and find out the depth of the wound in the banking sector, he said.

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