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Wednesday, January 24, 2018

Interconnected loans ravaging banks

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Directors of different banks are taking loans from each other's banks through affiliations within themselves, sources close to banking sector have informed. Banking-related angles have stated that from 7 lakh 50 thousand crore taka of disbursed loans, approximately 1 lakh 75 thousand crore taka has gone into the grips of influential bankers who hold directorial posts in several banks.

On the other hand, directors of 29 banks have reportedly taken loans from their own banks most of which are not yet repaid. This is how the figures of defaulted loans are incessantly mounting in the country's banking arena, relevant sources have mentioned.

Financial experts have already said that if such banking scams through defaulted loans go on, the country's economy will face deadly roadblocks in near future. Bangladesh Bank and Finance Ministry have meanwhile faced tremendous criticism from economists and eminent citizens for not being able to constitute good governance and accountability in the country's banking administration.

Caretaker government's former finance adviser Dr. Mirza Azizul Islam has said that most of the directors of banks are taking loans in the name of some organizations which do not exist. This is totally  unethical and this poses fearsome threats to banking sector, Dr. Mirza Azizul Islam further said. Bangladesh Bank should initiate tough measures to stop such interconnected loans within the directors of different banks, Dr. Mirza Azizul Islam remarked.

Reportedly earlier directors used to take high loans from their own banks which they did not pay back later on. Some directors, by misusing power, have waived the interest rate for their own loans. When this sort of unfair things became disclosed, Bangladesh Bank instructed all directors not to take loans from their own banks higher than 50% of their total shares.

After this instruction from the central bank, directors have now started securing massive loans from other banks, banking sources have reported. Most of these directors put undue pressure on their management to approve big sums of loans, sources associated with different banks have reported. Most of these loans are not returned which is how the load of defaulted loans is getting heavier day by day.

Banking sources have cited that directors of 29 banks have taken loans of 383 crore 22 lakh taka from their own banks while they have grabbed loans of 1 lakh 43 thousand 707 crore taka from 57 banks. Reportedly some directors of Meghna Bank have borrowed 10 crore 86 lakh taka from their own bank. Moreover, directors have taken loans of 18 crore taka from Midland Bank, 3 crore 30 lakh taka from Modhumoti Bank, 2 crore 10 lakh taka from NRB Bank, 37 crore 69 lakh taka from Simanta Bank and 63 crore 91 lakh taka from South Bangla Agricultural Bank.

Some directors of AB Bank, Al Arafah Islami Bank, Bank Asia, BRAC Bank, Dhaka Bank, Dutch Bangla Bank, Eastern Bank, Jamuna Bank, Mutual Trust Bank, National Bank, National Credit and Commerce Bank, One Bank, Premier Bank, Prime Bank, Pubali Bank, Shahjalal Islami Bank, Social Islami Bank, Southeast Bank, Standard Bank, The City Bank, United Commercial Bank and Uttara Bank have also taken loans from their own banks according to sources linked with banking authorities.

According to facts and figures from banking sources, directors have taken almost 1 lakh 75 crore taka from 53 banks out of the country's total 57 banks. Reportedly directors have taken loans from all nine new banks like 428 crore taka from Meghna Bank, 353 crore taka from Midland Bank, 402 crore taka from Modhumoti Bank, 174 crore taka from NRB Bank, 949 crore taka from NRB Commercial Bank, 621 crore taka from NRB Global Bank, 588 crore taka from South Bangla Agricultural Bank, 208 crore taka from Farmers Bank and nearly 700 crore taka from Union Bank.

Media agencies have informed that there are directorial loans of 11, 910 crore taka in Islami Bank, 9, 106 crore taka in Exim Bank, 5, 623 crore taka in Bank Asia, 5,053 crore taka in Dhaka Bank, 8, 817 crore taka in Janata Bank, 6,550 crore taka in National Bank, nearly 6, 000 crore taka in United Commercial Bank etc.

Enormous amounts of loans also were disbursed to the family members and relatives of directors of different banks reportedly while most of these loans have been defaulted. Widespread irregularities and corruption have been taking place in all banking functionalities such as loan approval and loan distribution allegedly.

Sources close to banks have further unveiled that over one hundred directors of different banks are deeply involved with large amounts of interconnected loans which are often mishandled. All these things are clearly ominous signs for the banking administration and total economy of Bangladesh and required initiatives should be taken up right now to stop banking scams, renowned economists have made such remarks.

Bangladesh Bank's former governor Dr. Salehuddin Ahmed said to The Asian Age, "The central bank should further strengthen its monitoring on all banks to restore integrity in banking activities."

Bangladesh Bank's former deputy governor Dr. Khondaker Ibrahim Khaled told The Asian Age, "The government should initiate tough measures to stop loan defaulting to avoid further damage in banking arena."

On the other hand, Professor Anu Muhammad, Jahangirnagar University said to The Asian Age, "Uncontrolled corruption has engulfed the country's banking and financial sectors. The regulatory authorities have completely failed to carry out their duties."

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