Irregularities and corruption, including money laundering and loan defaulting, have become pervasive within Janata Bank, constituting an unwritten rule. Besides disbursing substantial loans with nominal security measures, allegations abound that defaulted loans were rescheduled with only a one percent deposit instead of the mandated two percent for such rescheduling.
Sources reveal staggering financial irregularities totaling Tk 13,110.80 crore over the past six years, with a significant portion-44.30 percent-allegedly attributed to fraud and money laundering. This amount represents 22.85 percent of the total unpaid debt.
Furthermore, an audit conducted by the Auditor General and Controller of Bangladeshs office has unveiled 31 complaints of financial irregularities. This comprehensive audit spanned two and a half months. The audit report highlights the weak and irregular internal control system of the bank, stemming from non-compliance with established rules and regulations.
Instances of non-compliance include failure to adhere to loan approval and collection conditions, disregard for circulars issued by Bangladesh Banks Banking Regulation and Policy Department, violations of the Bank Companies Act of 1991, and deviation from the banks own credit risk management and loan approval
policies.
The Memorandum of Understanding (MOU) with Bangladesh Bank aimed at improving performance, as well as policies regarding foreign exchange transactions, were disregarded by Janata Bank. The bank extended substantial loans without adequate collateral, surpassed sanctioned limits for loan amounts, and waived interest in contravention of established norms.
The audit report emphasizes the urgent need to fortify the internal control system of audited branches, ensuring strict compliance with prevailing norms in government fund collection and expenditure.
Authorities urge the management of Janata Bank to prevent the recurrence of similar irregularities and diligently implement the recommendations outlined in the audit.
One notable irregularity concerns the rescheduling of a Tk 5,243.6 crore loan for Anontex Group, which violated terms specified in the memorandum of understanding with the Central Bank and contravened a BRPD circular at Janata Bhabans corporate branch in Motijheel. This rescheduling was carried out with a mere 1 percent down payment instead of the required minimum of 2 percent, as per the audit reports findings.
Moreover, between 2015 and 2020, Anontex Groups six subsidiary companies were granted Letter of Credit (LC) facilities despite previous loan defaults. These LCs were accepted as demand loans, leading to further defaults, with outstanding amounts totaling Tk 558.90 crore.
The branch reconciled the dues of S Alam Cold Roll Steels and S Alam Vegetable Oil Mills Limited, subsidiaries of Global Trading Limited, in violation of Central Bank norms. Loans were given to Global Trading beyond the sanctioned limit.
Back to back LC facility against fake export bills from Kamal Ataturk branch of Janata Bank Rajdhani. Exports never happened, so demand loans were created. These loans have defaulted. The bank has rescheduled a loan of Tk 267.50 crore without collateral.
Despite several failed exports, the banks Motijheel branch issued fresh LCs to BR Spinning Mills from January 2015 to June 2020. This money was never paid.
Janata Bank owes more than Tk 806 crore to this institution. The bank owes Tk 168 crore to Doreen Garments. Its local branch has opened several LCs against exports. But the export never took place.
Janata Bank local branch gave loan to Al-Madinah Tannery without proper rules. These remain unpaid. But this money was shown as bank regular in violation of BPRD circular. The tannery now owes Tk 102 crore to the bank.
Khulna Corporate Branch has given loans beyond its limits 5 times in the last 7 years. The bank now owes Tk 111.6 crore due to rescheduling and extending the moratorium facility multiple times.
The branch rescheduled loans of 3 institutions of Lockpur Group without taking adequate collateral, which is a violation of Bangladesh Bank norms. Now due is Tk 120.40 crore.
Despite repeated attempts to contact Janata Banks managing director, Abdul Jabbar, via phone calls, there was no response.
