Janata Bank Loan Scam: Whole bank was in it

When one applies for a loan to Janata Bank, the application goes through at least five layers of scrutiny. But if the applicant was AnonTex Group, none of these vetting processes were deemed necessary.

Now, the client has left Janata in a state of acute liquidity crunch.

Between 2010 and 2015, the state-owned bank's Janata Bhaban Corporate branch disbursed loans amounting to Tk 5,504 crore to AnonTex -- going way past the single borrower exposure limit set by the Bangladesh Bank.

And the loan applications were signed off even though the apparel exporter, which has an annual turnover of $150 million, had failed to pay back previous loans.

Md Abdus Salam Azad, Janata's current managing director, was the general manager of the branch from November 2011 to August 2013 -- when AnonTex got most of the loans. And before that, Azad served as the deputy GM of the branch for two years.

Typically, when a credit proposal is received, the branch manager has to verify whether the company has the capability to repay the loan.

The branch then submits the proposal to the credit committee, which is headed by the deputy general manager. If the loan application is for more than Tk 1 crore, the proposal must then be placed before the board by the managing director.

In case of AnonTex, the Janata board gave the go-ahead to all the loan applications.

Abul Barkat, professor of economics at Dhaka University, served as the chairman of the Janata board from 2009 to 2014.

SM Aminur Rahman served as the MD of the state-owned bank between January 2008 and July 2014. He         was also the MD between 2004 and 2006.

The board of directors and top management are responsible for disbursement of huge amounts of loans to AnonTex Group in gross violation of the credit rules and norms, said Shaikh Md Wahid-Uz-Zaman, who served as the chairman from December 2014 to December 2017.

“Disbursement of fresh loans to AnonTex stopped when I joined the bank,” Wahid-Uz-Zaman said.

In 2015, the business group restructured loans of Tk 1,095 crore under the central bank's special package for borrowers with loans of Tk 500 crore and above after furnishing down payment of just 1-2 percent instead of the usual 10-15 percent.

“The group did not repay any single penny of instalment from its business earnings,” he said, adding that it adjusted some credit by taking fresh loans from the bank.

In August 2017, some companies of the group have plunged into the defaulting zone. Out of the total disbursed loan, Tk 1,098 crore has become non-performing loans. 

Contacted, Azad acknowledged that some of the loans to AnonTex were sanctioned during his tenure as the GM and deputy GM of the branch.

“Adequate collateral had been kept by the bank against the disbursed loan. We have recently recovered Tk 350 crore from the group.”

The bank rescheduled some default loans of the group by taking prior approval from the BB, he said, adding that AnonTex's business performing well.

Rahman, who was the MD when the loans were sanctioned, said that he had placed the credit proposal before the board as per the recommendation of the branch.

Echoing Azad, he said: “AnonTex is capable of refunding the loans.”

Asked why the group has become a defaulter, he said that it was not a matter of concern as a number of well-reputed companies are frequently falling under defaulting zone.

Permission was taken from the central bank when the bank sanctioned loan to the group exceeding the single borrower exposure limit, according to Rahman.

According to a Bangladesh Bank document, the central bank allowed the state-owned bank to sanction loan to Galaxy Sweaters and Yarn Dyeing Ltd, a concern of AnnonTex Group, in September 2014 exceeding the single borrower exposure limit.

But at that time, the central bank tagged the condition that no further loans can be disbursed to the group before adjusting the single borrower limit.

Janata though continued to extend fresh loans until 2015 -- ignoring the central bank's instruction.

According to Bank Company Act 1991, a bank cannot lend more than 25 percent of its capital base to a single party.

Barkat told The Daily Star on Monday that the group had set up industrial units following European standards, and its loan repayment was very good during his stint as the Janata chairman.

Asked whether he inspected the factories of the group, he said he had not visited them.

“But top officials of Janata and a number of academicians and students of industrial economics at the DU had earlier visited the factories. All of them had said the factories were of European standards,” he added.

A Dhaka-based businessman named Md Younus Badal is managing director of the group. He could not be reached for comments.