BDT 26.38 billion Loan Scam

The Sonali Bank will relieve three of its senior officials of their duties for lending BDT 26.38 billion (EUR 263.8 million) to a little-known group beyond their authority, reports the Daily Star.

The board of the state-run commercial bank at a special meeting last night decided to take the action to comply with a Bangladesh Bank (BB), the central bank of Bangladesh order.

The BB had asked the bank to take punitive steps against the three. They include AKM Azizur Rahman, deputy general manager of the bank’s Ruposhi Bangla Hotel branch, and Saiful Hasan, assistant general manager of the same branch.

The board also came down heavily on the bank’s management for failing to act in advance to stop such embezzlement, said an official who was present at the meeting.

The Ruposhi Bangla Hotel branch lent Hallmark Group around BDT 20 billion (EUR 200 million) through a plot.

Hallmark Group recently opened local letters of credit (LC) worth around BDT 5 billion (EUR 50 million) in favour of Anwara Spinning Mills, Max Spinning Mills and Star Spinning Mills to buy yarn. The three companies are also the clients of the same branch. The group also gave guarantees to repay the LCs.

Following the guarantee, the bank put in the money with the accounts of the three companies through the purchase of acceptance bill. A few days later, the companies urged the branch to transfer the money to the account of Hallmark Group and the branch duly obliged.

In a 17-point letter to Sonali Bank, the central bank on May 21 said Anwara Spinning Mills, Max Spinning Mills and Star Spinning Mills are owned by the key person of Hallmark Group, Md Tanvir Mahmud. He is also the main beneficiary of the loans.

The letter said the Ruposhi Bangla branch had demonstrated utter negligence to banking regulations.

The branch manager has breached credibility in discharging responsibilities by lending beyond jurisdiction and without taking permission from the central bank, it read.

The central bank said of the BDT 26.38 billion (EUR 263.8 million), BDT 17.35 billion (EUR 173.50 million) is funded loans and BDT 9.03 billion (EUR 90.20 million) is non-funded loans. Altogether, BDT 26.38 billion (EUR 263.8 million) has come under additional risks at the branch. The sources at the bank said that one of the Prime Minister’s advisers, who is not an economic advisor, influenced the matter on behalf of the Hallmark Group.

Officials said the Sonali Bank head office had instructed all its branches to lend less compared to the previous year, as the bank was facing liquidity crisis. The Ruposhi Bangla branch did not follow the instructions.

According to the instructions of the Sonali Bank headquarters, a DGM can buy a maximum of BDT 300 million (EUR 3 million) as acceptance bill from a group or organisation, but DGM AKM Azizur Rahman bought acceptance bill worth BDT 5 billion (EUR 50 million) given to Hallmark Group on a single day.

The central bank asked Sonali Bank to classify its loans through its own auditors in the next one month. The bank has to report to the central bank within the following 10 days about the steps it has taken.

– END –

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