March 28, 2024, 2:17 pm


SAM

Published:
2018-03-24 19:54:15 BdST

BB probe finds Tk 500cr sanctioned flouting banking rules, procedures; Tk 367cr of the amount already becomes defaultedAnother scams hit Farmers Bank


FT ONLINE

Bangladesh Bank has unearthed another string of scams at the Farmers Bank involving loans of around Tk 500 crore that were sanctioned to 11 companies in violation of banking norms and procedures.

Of the amount, loans of more than Tk 367 crore that the bank's Motijheel branch gave to 10 of the companies from November 2013 to November last year have become defaulted. Some of the firms are either obscure or little-known.

The central bank has held the private bank's former chairman Muhiuddin Khan Alamgir and ex-chairman of its executive committee Mahabubul Haque Chisty largely responsible for the scams.

The irregularities are gross -- some of those outright fraud -- ranging from sanctioning loans without any application to taking loans and not using any of that for the purposes those were meant for.

The new findings came up in a BB probe in December last year, a couple of years after the central bank detected scams involving Tk 400 crore at the Farmers Bank's three branches in the capital's Gulshan, Motijheel and Shyampur.

The latest BB investigation found at least 11 counts of irregularities in disbursing the loans to the 11 companies. They are NAR Sweaters Ltd, Advanced Development Technologies, Abeda Memorial Hospital, Index Housing, Al-Faruque Bags, Nahar Farmers Group, Apollo Trade International, Mollik Aquaculture Farm, Messers Premjoy, Mac Trading and Bangladesh Development Company.

Except for NAR Sweaters Ltd, all these companies have become defaulters with the bank.

The private bank also concealed information on the defaulted loans to show inflated profit, breaching the Banking Company Act 1991.

The bank's Motijheel branch resorted to “unfair means” to show Tk 367 crore given to 10 companies as unclassified loans though those already became defaulted, according to the BB.

The branch showed only Tk 60 crore as defaulted loans till September last year. But the BB probe found that the amount was more than Tk 619 crore. The private bank had disbursed loans of Tk 1,038 crore between November 2013 and November last year, said the BB probe report.

Two ex-directors of the Farmers Bank -- Alamgir and Mahabubul -- approved a major portion of the loans, abusing their position and without taking consent from other board members, it mentioned.

The bank's Motijheel branch gave loans of Tk 130 crore to NAR Sweaters Ltd in different phases between 2016 and last year though its head office rejected the firm's credit proposals.

The branch disbursed the funds to settle back-to-back letters of credit (LCs) opened by NAR Sweaters. The RMG company's outstanding loans stood at Tk 34.39 crore when the BB carried out the investigation, said the report.

The private bank will have to pay for the LCs and create long-term loans against the firm if it fails to repay the loans in due time, it said.

NAR Sweaters already had defaulted loans of around Tk 50 crore at the Islami Bank Bangladesh Ltd (IBBL) when it opened LCs with the Farmers Bank early in 2016.

Though the Farmers Bank management knew that NAR Sweaters had overdue loans with the IBBL, it allowed the firm to open LCs.

BB DIRECTIVE

In mid-January this year, the BB directed the Farmers Bank to conduct a functional audit on its Motijheel branch's credit accounts with outstanding amount of Tk 1 crore each and above.

The BB asked the bank to submit the audit report by February 28 but it failed to do so.

Farmers Bank Managing Director Md Ehsan Khasru said that the bank employed Artisan Chartered Accountants in mid-January to conduct the functional audit.

On January 4, Ehsan was appointed to replace AKM Shameem, who was sacked by the BB on December 19 for failing to protect the depositors' interests.

Ehsan said steps will be taken in line with the recommendations of the chartered accountancy firm.

A number of defaulter clients, including Advanced Development, Abeda Hospital and Index, applied to the bank for having their defaulted loans rescheduled, he said.

Ex-Farmers Bank chairman Alamgir, also an Awami League lawmaker, said he had not sanctioned any loans, using his executive power.

“The board of directors of the Farmers Bank officially sanctioned all the loans. The defaulted loans of the bank were below 4 percent when I was the board chairman.”

Asked why the branch concealed data on the defaulted loans, Alamgir, also ex-home minister, said the information was incorrect as the branch had no scope to hide data on non-performing loans.

Despite repeated attempts, Mahabubul could not be reached for comments.

The two resigned from the bank board in November last year after the BB asked them to quit over their alleged involvement in loan scams.

Asked whether the BB would take any punitive measures against the persons involved in the scams, BB spokesperson Debashish Chakraborty declined to comment.

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