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| Dhaka, Monday, 20 November 2017

Rezwan Ahmed

Staff Correspondent

Janata Bank caught in Tk 5,000 crore loan scandal

2014-10-14 19:52:58
Janata Bank caught in Tk 5,000 crore loan scandal

Rezwan Ahmed, thereport24.com, Dhaka:

Against the backdrop of state-owned Sonali Bank and BASIC Bank's hundreds of crores of virtual looting by fortunate few, officials have found evidence of financial irregularities of a large sum at Janata Bank as it was caught off the guard over a Tk 4,964 crore scandal painting a horrible picture of the country’s banking sector.

The scam has been spotted in a special scrutiny of the state-owned bank’s documents carried out by the office of the Comptroller and Auditor General (CAG), the supreme audit institution of Bangladesh.

The CAG has already submitted the report to Janata Bank as well as the Ministry of Finance detailing the scandal.

The loan scam irregularity involves issuing loans in breach of Memorandum of Understanding (MoU) conditions, preparing fake export bills and purchasing those by presenting organizations existing only on paper as local exporters, acquiring liability without careful considerations, acquiring liabilities of insolvent clients and raising LTR (Loan against Trust Receipts) limits without collaterals or proper mortgaged security.

The irregularity was revealed upon special scrutiny of all accounts of the bank from March 2 to August 13 this year. A four-member team of the Commercial Audit Directorate under the office of the CAG scrutinized the documents of the state-owned bank which was best performing banks even a few years bank.

The CAG report said the irregularity was found in the 2010-2013 records of the bank’s Ramna branch, and the small and medium industries section of its headquarters. A total of 43 clients, including individual and business conglomerates, took the loan.

The report also included 43 serious audit objections.

The Commercial Audit Directorate has suggested the bank should strengthen its internal control system and audit operations in order to prevent loan irregularities. The report also stressed that the bank should comply with the banking and government rules, orders, notices and policies issued on different occasions, and existing financial rules and regulations of the sector.

Acting Managing Director of Janata Bank Omar Faruk has admitted the sheer irregularity but he said there could be some mistakes. He also objected to the amount claimed in the report of the Commercial Audit Directorate.

“They object whenever they find that loans have not been repaid by the borrowers but there could be a range of logical reasons behind this. Loan processing involves many factors that might be in the knowledge of only the borrowers and the bank. However, we will be more cautious in issuing loans in the future days for the sake of transparency and accountability,” he said.

Meanwhile, noted economist Mirza Azizul Islam described the frequent instances of loan scandals rocking the country’s banking sector as unwanted.

“This is gradually leading to an unpleasant situation. I think proper investigation into the allegations and bringing the perpetrators to book are necessary to avoid recurrence of such incidents of irregularities in the interests of the country and its economy,” he added.

Thereport24.com in a series of reports will disclose identities of 43 borrowers, how they took the loan and also how much they took from which branch using what sort of mechanism.

(This report has been translated by Mahmudul Islam and edited by Md. Al-Amin for thereport24.com/English)

Ends/thereport24.com/MI/AMA/Oct 14, 2014

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