Shakhawat Hossain
Bangladesh Bank has recently presented a list of top twenty five loan defaulters to the Parliamentary Committee on Finance Ministry. However, the central bank has not yet unveiled the names and profiles of top twenty five loan borrowers who obtained enormous figures of loans from different banks reportedly by submitting insufficient mortgages and cashing in the political influence .
According to sources, these loan recipients are highly influential and they have robust control over the boards of directors in most of the state-run and private banks, relevant sources have informed.
The parliamentary committee, has, however, asked BB to submit a report after detecting the barriers in realising the default loans and also sought suggestions within next 45 days to reforms the laws to stop loan defaults. Besides, the committee asked to submit a detailed report on the defaulters with their family identification and how much they have taken in loans from which bank.
Finance Minister also stated that the banking arena is heavily inflicted with bad debts of 65 thousand crore taka. The total sums of defaulted loans have in the meantime reached 1 lakh 35 thousand crore taka including Bangladesh Bank’s written off debts, financial sources have stated.
The amount of defaulted loans of top 25 defaulters reached BDT 9,696 crore up to September 2017. According to Bangladesh Bank’s list, the top default borrowers include Mohammad Ilias Brothers (BDT 889.49 crore), Quantum Power Systems Ltd (BDT 558.9 crore), Jashim Vegetable Oil Ltd (BDT 547.95 crore), Max Spinning Mills (BDT 525.60 crore), Benetex Industries (BDT 516.94 crore), Dhaka Trade Housing (BDT 485.29 crore), Anwar Spinning Mills (BDT 474.37 crore), Siddique Traders (BDT 428.57 crore), Yasir Enterprise (BDT 414.80 crore), Alfa Composite Towels Ltd (BDT 401.73 crore), Legend Holdings (BDT 347.85 crore), Hallmark Fashion Ltd (BDT 339.34 crore), Mac International (BDT 338.74 crore), Monno Fabrics (BDT 338.37 crore), Fair Trade Fabrics (BDT 322.4 crore), Saharis Composite Towel (BDT 312.96 crore), Nurjahan Super Oil Ltd (BDT 304.49 crore), Keya Yarn Ltd (BDT 292.53 crore), Saleh Carpet Mills (BDT 287.1 crore), Fair Yarn Processing Ltd (BDT 273.16 crore), SK Steel (BDT 271.48 crore), Chowdhury Knitwear (BDT 269.38 crore), Help Line Resources Ltd (BDT 258.30 crore) Six Seasons Apartment Ltd (BDT 254.57 crore ) and Bismillah Towels Ltd (BDT 243.84 crore).
Financial sources have further revealed that voluminous amounts of loans clinched by big borrowers are often being rescheduled and written off by the central bank to give them undue privileges in violation of banking ethics. Bankers have said that a defaulted loan can be rescheduled up to highest three times but some loans are being rescheduled ten to twelve times due to nepotism and political pressure which is a gross violation of banking principles.
AMA Muhith had also informed Parliament last week that seven banks are undergoing a hazarded plight with capital deficit reaching over 9,000 crore taka. Among these seven banks there are four state-run banks while another three banks are private ones. On the other hand, managing directors of different banks have reportedly asked further for 20, 000 crore taka from the government to overcome their capital crisis.
According to media reports, seven banks of Bangladesh were operating with capital deficits totalling over Tk 94 billion until September last year. The total amount of capital deficit in state-owned banks Sonali, Rupali, Janata and BASIC was more than Tk 76.26 billion. Privately-owned Commerce Bank, Farmers Bank, and ICB Islamic Bank‘s total capital deficits were over Tk 17.91 billion. The information on the banks’ capital deficits were revealed in the parliament following a query by independent MP Abdul Matin on February 26. According to Finance Minister AMA Muhith, the government gave the state-owned banks Tk102.72 billion recapitalisation facility from 2005-06 to 2016-17, which were already added to the banks as capital.
Against such a large-scale banking meltdown in the country, national mass media have widely reported that Sonali Bank, Janata Bank, Agrani Bank, Rupali Bank and BASIC Bank have become safe havens for rule violators as their boards illegally dictate the loan approval process and thus sources of plundering public money by some ‘businessmen’ having close links with the ruling Awami League. It is now common knowledge that such plundering of public money could take place for lack of transparency in credit approval, credit administration and credit oversight, poor selection of borrowers, politically motivated lending and negligence in risk management. All these failures of the state-owned banks also squarely fall on the government, which sets up the bank boards, mostly with people of a partisan bias, to apportion favour among influential quarters of the party in power. The prevailing situation is so alarming that, without prosecuting the financially errant directors, it will be mere rhetoric to talk about curbing massive corruption engulfing the country.
Who is to be blamed?
As augmentation of defaulted loans has hit the country like a plague, some nagging questions have raised in the mind of the countrymen as to where Tk 94 billion capital have gone? Who are behind the scene of all the bank scams what would be punishment for them? It should be scrutinized for what reasons information about influential loan borrowers is not being exposed. Proper actions cannot be taken against financial culprits if the authorities do not disclose relevant details.
These questions are also being validly raised by the countrymen when the “helpless” finance minister openly admits that the government is to blame for the rising loan defaults at state banks in the last 9 years.
The people called for punishment for people involved in corruptions and scams like Hallmark scam, Bismillah Group scam, BASIC Bank and Janata Bank scams, Bangladesh Bank reserve heist and share market scams, which that shook Bangladesh, to prove that the government wanted to curb corruption.
It is certainly sure that politically appointed most board members are reportedly involved in the ongoing loan scam remained outside the purview of any legal or procedural action proves that incumbents are not committed to contain the corruption in the sector. But what is the reason behind? Such a troublesome question is being openly raised soon after the country’s major opposition leader and former Prime Minister Khaleda Zia landed in jail on February 8 after a makeshift court sentenced her to five years in jail in a graft case filed during the military-controlled regime in 2008.
In the evolved circumstances billions of taka is being looted in the country, but one hardly hears of any cases regarding such embezzlement. In terms of money, the charges against Begum Zia are nothing in comparison. Charges against a politician who had been at the helm of government are definitely serious, but there was no need to settle the case before the election. However, that was given priority and this has made a participatory and credible election uncertain.
Though the Anti-Corruption Commission (ACC) has so far brought charges or arrested 41 bankers for their alleged involvement in the loan scams, including embezzlement of Tk 3,700 crore by Hallmark Group from Sonali Bank and Tk 6,000 crore from BASIC Bank, the commission, however, not yet brought charge against directors including former chairman of BASIC Bank chairman Sheikh Abdul Hye Bacchu.
In most cases, managerial level bankers are facing charges. While the bankers in question certainly have certain responsibilities, they appear to be used as scapegoat to intentionally protect the politically appointed board members from facing legal action for their financial frauds. When asked about the inaction of the ACC in this regard, the response of the ACC lacked any clarity.
Even members of the parliamentary body on finance raised questions about the role of ACC saying that it is ‘mysterious’ why it has failed to prosecute the mastermind of the loan scams. In this backdrop when the involvement of people closely linked with the political incumbents are making headlines of media since 2009, the government in fact has taken steps to prevent information on loan scam be made public, instead of bringing the mastermind of loan scam to justice. In a directive of the financial division on February 8, it has asked state-run financial entities to check against leak of ‘confidential’ information — an order appears to be an effort to hide issues of national importance than to redress the prevailing crisis.
Besides, all people of the country have rights to know what is happening in the banking system including loan disbursement. All the defaulted and borrowed money belongs to the country’s citizens. Therefore, there is no valid point in hiding information about bank loans.
Why JS passes ‘controversial’ banking companies act?
Most interestingly and surprisingly, national Parliament on January 16, 2018 passed the ‘controversial’ Banking Companies Act-2018 without bringing any change to the proposed law, which allows four members of the same family to sit on the board of a commercial bank and the directors to hold their posts for nine years consecutively. Despite protests from various quarters, the government has passed the law to benefit some directors of banks.
Finance Minister Abul Maal Abdul Muhith placed the bill before the House seeking its immediate passage. The House, with Speaker Shirin Sharmin Chaudhury in the chair, passed the bill by a voice vote rejecting all the amendment motions put forwarded by the opposition lawmakers.
Economists and noted bankers opposed the proposed law saying it would hurt the interest of depositors. They said the government brought the amendments for the benefit of the businessmen. ‘It would turn the banks into family concerns as general shareholders and clients have been strongly condemning the decision, they observed.
Why Bangladesh Bank heist report delayed again?
Meanwhiel, the submission of the investigation report on the digital heist of the central bank, which is one of the biggest cyber heists in the history, has been deferred once again. The Dhaka Metropolitan Magistrate’s Court has fixed April 1 as the new date after the investigation officer failed to file the report on February 28. Hackers pulled off one of the biggest cyber heists in history when they stole $81 million from Bangladesh Bank’s account with the Federal Reserve Bank of New York in February 2016. Bangladesh Bank’s Accounts and Budgeting Division Joint Director Jubaer Bin Huda filed a case with Motijheel police on March 15 that year over the heist. The court had ordered CID to investigate the case and file a report.
“Govt partly to blame for state banks’ soured credit”
Meanwhile, Finance Minister AMA Muhith had admitted that the government is to blame for the rising loan defaults at state banks. “Classified loans are very high,” the minister said at Sonali Bank’s Annual Conference on February 3, 2018.
“The government is partly at fault. We often put pressure on the six (state) banks. As Sonali Bank is the largest bank, it faces the most pressure.”During a question-answer session in parliament, Muhith said banks had failed to recoup Tk 656 billion from top borrowers in the past 10 years. Classified loans amounted to Tk 725 billion, he had added. The Awami League was in power for nine of the 10 years Muhith discussed. Bad loans are roughly twice the cost of the Padma Bridge. “It is your main duty to know your customers and scrutinise any proposal to the best of your ability. Future success depends on project planning.”
“Opposition” MP urges PM to sack failed ministers
“Opposition” lawmaker Ziauddin Ahmed Bablu in Jatiya Sangsad on February 28 came down hard on the finance minister and urged Prime Minister Sheikh Hasina to sack ‘failed’ ministers for the interest of the government. Standing on a point of order, Bablu asked for formation of a bank commission to identify irregularities in the banking sector. The Jatiya Party MP quoted finance minister AMA Muhith as saying in a statement two days earlier that the banks had Tk9,500 crore capital deficits and questioned where the capital had gone. He said that the capital was being provided by taxpayers and it was their money.
Besides, esteemed citizens and financial experts have stressed that the country’s people deserve to know in details about all loan defaulters and loan recipients. Hiding information about people who receive big amounts of loans is a major obstacle for the establishment of accountability and good governance in banking and financial activities, monetary analysts have said.
- The Holiday/09-03-18
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