State-owned Janata Bank is facing liquidity crisis as it became the lender of highest amount of defaulted loans in last six months.
At the end of December 2023, Janata Banks defaulted loans increased to Tk 30,875 crore at the end of March from Tk 28,665 crore in December 2023, which is around 32.52 per cent of the total lending.
Its learned that most of the defaulted loans were extended to clients using irregular means.
It is against this backdrop that Bangladesh Bank appointed observer and coordinator in Janata Bank.
Janata Bank has been facing liquidity crisis as it is not getting back depositors money lent to some financial institutions and banks.
Janata Bank is also unable to repay dollar loan taken from the Export Development Fund (EDF).
Of the loans disbursed by Janata Bank, Tk 40,000 crore was lent to three influential industrial groups, the amount is about 42 per cent of total loans it had extended.
At the end of March, loans extended by Janata Bank stood at Tk 96207 crore.
Defaulted loans gradually made Janata Bank a sick bank.
Industrial groups left Janata Bank one by one. Many controversial and anonymous groups have been listed by Janata Bank as its top customers. Despite repeated rescheduling, Janata Bank failed to recover defaulted loans.
Total non-performing loans of the banking sector is less than 10 per cent, but the defaulted loans of Janata Bank is over 32 per cent.
Janata Bank could face a major crisis as three groups owe a large part of the accumulated defaulted loans.
As a result, the EDF facility of Janata Bank customers has been stopped.
When asked, Janata Bank Managing Director Abdul Jabbar said that the board of directors decided not to lend to big customers who had borrowed exceeding their limits under special consideration.
He said that the board decided not to lend to these borrowers until they repay.
According to Janata Bank, its top borrowers include Beximco Group, S Alam and the Orion Group. The three groups owe Janata Bank about Tk 40,000 crore.
The debt of these groups exceed their credit limits.
Bangladesh Bank approved these loans.
Out of Tk 31,000 crore lent by Janata Bank Motijheel local office, Tk 22,000 crore was lent to the Beximco Group.
Orioin, Enontex and Thermex groups owe a major portion of Tk 30,000 crore lent by the Corporate Branch of Janata Bank.
And almost all the loans were extended to S Alam Group by by Janata Bank corporate branch in Chattogram.
Bangladesh Banks former Chief Economist Mustafa K Mujeri said, Not only Janata Bank, but the entire banking sector has become hostage to big influential customers. They are associated with the state apparatus. This situation has arisen due to lack of discipline in the banking sector.
Due to non-compliance with the rules, Janata Bank has become a defaulted lender. Bangladesh Banks policy is also generous for defaulters. Because of this, many borrowers are not repaying.
At the end of 2022, against the defaulted loans required Janata Bank to have Tk 13, 854 crore as security deposits.
Bangladesh Bank has given Janata Bank time till 2031 maintain remaining Tk 8,503 crore as safety deposit from its profits.
Bangladesh Bank Executive Director and Spokesperson Mejbaul Haque said in this regard, Bangladesh Bank appointed coordinator in Janata Bank to improve its financial situation. It is not possible to say anything about the irregularities and loans given earlier. Not all loan proposals were sent to the board either, he said.
According to data as of March, Tk 1, 746 crore is owed by Crescent Groups Rupali Composite, Crescent Leather and Crescent Tannery. MA Kader is the leader of these institutions.
Apart from this, Tk 1,077 crore was lent to Kaders elder brother Abdul Azizs Remex Footwear. He is a film producer and jazz multimedia leader.
Tk 1, 227 crore of Janata Bank was borrowed by Ratanpur Groups Ratanpur Ship Re-cycling, SM Steel Re-Rolling Mills and Modern Steel Mills. The owner of this group is Maksudur Rahman of Noakhali, he is a former director of South Bengal Agriculture and Commerce Bank.
Chowdhury Knitwear and Chowdhury Towel defaulted in repaying loan to the tune of Tk 625 crore, these companies are owned by Khaja Soleman Anwar Chowdhury of Bismillah Group who fled the countrry.
Defaulted loans of Khaja Soleman Anwar Chowdhury. Habib Hotel (Holiday Inn) in the capital amount to Tk 595 crore. The owner of this hotel is Alam Ahmed, Adviser of Central Committee of Bangladesh Krisok League.
Apart from this, Thermex Group owes Janata Bank Tk 569 crore, Gram-Bangla NPK Fertilizer owes Tk 552 crore, Enontex Groups MH Golden Jute and Shineesh Knit owes Tk 467 crore, all defaulted loan.
The defaulted debt of three companies of Ibrahim Group is Tk 422 crore, Delta Composite Knits -Tk 373 crore and Lithun Fabrics -Tk 297 crore.
The defaulted loan of two companies of Asif Group is Tk 279 crore, three companies of Lockpur Group -- Tk 262 crore, Hansol Paper Mill -- Tk 265 crore, MBA Garments defaulted on repaying Tk 168 crore, Afil Jute Mills defaulted loan amount to Tk 163 crore, MAC Internationals -- Tk 162 crore, Shahnewaz Groups -- Tk 159 crore, Landmark Fabrics --Tk 158 crore and Align Apparels --Tk 146 crore.
In total, Tk 9, 719 crore of Janata Bank is stuck with 20 top defaulted borrowers.
Janata Bank succeeded in recovering only Tk 32 crore from these customers in 2023.Tk 91 crore was recovered in 2022.
