Janata Bank decides to sue Crescent

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AnonTex to get more loan facilities

The Janata Bank authorities have taken two contradictory decisions on similar cases relating to a Tk 10.5 crore loan fraud on the part of two industrial groups.
On the one hand, the board of the directors of the state-owned bank in a recent meeting decided to sue the Crescent Group on charges of loan fraud. On the other, they plan to provide AnonTex Group with a limited amount of indirect credit facilities by increasing LC limits for operating their business.
According to officials at the bank, the board keeps regular supervision to recover loans while the head office and branch have been maintaining constant contact with borrowers.
Following instructions from the central bank, the Janata Bank authorities have identified Crescent’s loans as defaulted ones. Crescent Group Chairman MA Kader could not be reached for comments on the matter. But in a letter recently sent to Janata Bank, he said if he is given some time he will be able to repay all debts by running the business.  Meanwhile, Bangladesh Bank has given some instructions to Janata Bank after investigating loan frauds in these two groups.
Recently, these instructions were given in two separate letters sent to the Janata Bank managing director. These include marking the entire debt of the two groups as defaulted ones, taking adequate security deposit against the loans and ensuring regularization of collections.
Following the directive, Janata Bank has already identified Crescent Group loans as defaulted ones. The Crescent Group went to court and received a stay on the decision. The court later vacated the stay upon a petition by the bank authorities. The bank has now again identified the loans as defaulted ones. As a result, the group is not getting any new loans.
It is to be noted that the Crescent Group has been given various types of some Tk 5,000 crore loan facilities from Janata Bank. Of this, Tk 2,760 crore has been given as fresh loan. The company has taken Tk 1,250 crore by selling fake export bills and Tk 1,075 crore as the government provided cash assistance against export earnings.
The central bank has already deposited Tk 408 crore in the treasury of the government from the accounts of the Janata Bank, because of subsidy payments in this sector without export. The remaining money is being investigated, according to official sources.
On the other hand, AnonTex has taken around Tk 5,500 crore loans from the bank. Of this, Tk 3,530 crore was taken as cash and Tk 1,130 crore as indirect loan. Of the loan, Tk 800 crore has been repaid.
Despite directives from the central bank, the Janata Bank did not mark the AnonTex’s loans as defaulted ones allegedly due to pressure on the bank from the Finance Ministry. Even applications have been filed with the bank and the ministry seeking fresh loans for AnonTex. The finance ministry meanwhile held a meeting with the Janata Bank authorities in this regard. However, Janata Bank has not been given any specific directions on this issue.
The Janata Bank board recently discussed the situation. It focused on the issue of how to offer new loans of a limited amount by expanding the LC limit opened in the name of the group’s various organizations for managing business of Anontex. Further detailed information about the group’s overall status has been sought from the branch concerned of the state-owned bank.
Allegedly, various rules were flouted in the case of approving loan to AnonTex Group. When one applies for a loan at Janata Bank, the application goes through at least five layers of scrutiny. But in the case of AnonTex, none of these processes seemed to have been followed.
If they were, the apparel exporter should not have been able to take out loans amounting to Tk 5,504 crore — despite failing to pay back its previous loans. Not only that, Janata’s loans to AnonTex accounted for more than 25 percent of the state-owned bank’s capital base, which was in violation of the single borrower exposure limit set in the Bank Company Act 1991.
The group, which has an annual turnover of $150 million, has failed to make regular installment payments, leaving Janata with a massive hole in its capital base.
AnonTex was founded in 2004 and is a member of the Bangladesh Garment Manufacturers and Exporters Association and the Dhaka Chamber of Commerce and Industries.Dhaka-based businessman Md Younus (Badal) is the managing director of AnonTex Group.

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