Home Bank & Finance Who will eradicate corruption like cancer
from banking sector?
Bank & Finance - July 28, 2022

Who will eradicate corruption like cancer
from banking sector?

Defaulted loans exceeded Tk 1.13 tri

Golam Mostafa Jibon: Question has now intensified everywhere that who will eradicate the corruption and irregularities spread out like cancer in the Banking sector.
Despite the government efforts, the banking sector is now on the verge of ruination due to the continuous corruption and irregularities, it is alleged.
Experts said, the banking sector is termed as the backbone of a country. But the country’s banking sector has been going through instability for several years. Instability has been created in this sector due to various reasons ranging from financial corruption and loan fraud in almost every bank. Already, defaulted loans have exceeded Tk 1,13,000 crore. There are various types of fraud at the root of this huge amount of default. Some of these frauds involve the bank directly and some are done by the customer. However, most of the frauds committed by customers are with the connivance of bank officials. This is how the country’s banking sector is sinking, comments of former top bankers.
Meanwhile, even if these irregularities are revealed, there is no precedent for the criminals to face any major punishment. Because of this, they are more reckless, said the concerned people. The High Court meanwhile commented on the hearing of a case on Tuesday last that most corruption occurs in the banking sector of Bangladesh. It has also given a finding that corruption in this sector is crippling the country. Already, several major corruptions in the banking sector of Bangladesh have been proven. The biggest corruption among them is the name of the state-owned banks involved in loan fraud and money laundering. The biggest loan fraud in the history of the country’s financial sector has happened at the hands of Sonali Bank.
Former and current bankers do not agree to say the paid money in favor of Hallmark as a loan. They call it money grabbing drama in the name of lending. Apart from this, Bismillah Group, Anontex, SA Group, Noorjahan, Oltex and Sunmoon Group are significant among the loan scams. Of them, Bismillah Group has taken a loan of Tk 1,200 crore from five banks of the country including Janata Bank. All of it is now in default. The concerned officials of Bangladesh Bank do not think that this loan will be recovered.
Anontex has caused the country’s biggest financial scam. This group has taken a loan of Tk 5,500 crores from various banks. The entire loan has now defaulted. The amount including interest is about Tk 6,500 crores. Some 16 banks gave a loan of Tk 3,500 crore to the Chattogram-based SA group. Of them, 1,800 crores are now in default.
Crescent Group’s debt was Tk 3,900 crore. The entire loan given by Janata Bank is now in default. Apart from this, Citycell has closed its business with a loan of Tk 1,200 crore taken from 12 private banks.
On the other hand, Noor Jahan Group took a loan of Tk 2,500 crore from 22 banks. All of those loan is now in default.
BB officials and some related banks said that, apparently it is impossible to bring back these loans. The officials of the banks are also responsible for giving these loans. They used illegal means to lend to groups. The groups also gave unethical facilities to officials to get loans.
Several reports mention that, these frauds are done with the connivance of both the banks and the customers. A former managing director of a private bank commented that even if these frauds are proven, there is no visible action taken by Bangladesh Bank. Fraud in the banking sector is also done in political identity. In some private banks, ownership changes due to various manipulations. As soon as the new board comes in, it withdraws money from the bank in various ways in the name of loan. There are also cases of loan waivers to some companies. In these incidents, the Bangladesh Bank investigated, but the directors or chairmen of the bank remained outside because of influence.
They forced the inquiry team to go back. The banks are not cooperating in the investigation.
A top official of a private bank commented that the road to fraud in banks has been smoothed over the ages.
He told the light of time, “When the chairman or the directors force us to give loans, there is nothing to do. Because of we are paid employees and compelled to follow their orders. When they give an order, it becomes our job to carry out that order. Even if they come under investigation from Bangladesh Bank, they are managed differently. The incident of former executive director Shah Alam came to light. But he was not punished so far. The central bank cannot punish anyone in this way. If Bangladesh Bank could have confirmed the punishment, then we could have supported them.
Basic Bank is the biggest example of bank fraud through directors and chairmen.
An official of Bangladesh Bank commented that the former chairman Abdul Hai Bachchu and other officials including the then managing director have destroyed the bank.
He said, “Basic Bank started positive banking among the state-owned banks. But in the change of power in 2009, there was a change in the position of chairman of the bank. The government appointed the petty leader of Jatiya Party Abdul Hai Bachchu as chairman of the bank. The decline of this bank started from there. The bank was completely destroyed by fraud in different names and unnamed. Tk 4,000 crores of the bank’s deposits was also misappropriated. After that, the bank could not stand upright. Although, the government has tried in various ways, nothing has been done. Bangladesh Bank also could not bring Bachchu under punishment. That is why, many more frauds have been dared. Farmers Bank fraud is one of them.
The former governor of Bangladesh Bank Salehuddin Ahmed said, “The problem in government banks is very old. The problems are spreading to private banks as well. Irregular disbursement of loans, unnamed loans and lack of good governance are the overall feature of the banking sector. In spite of this, few banks are doing well. The rest are in trouble. Establishing good governance in the banking sector is now a big challenge for the government.”
Managing director of a private bank seeking anonymity told The Daily Industry that, “Not only good governance, there are challenges with the leadership of the banking sector as well. Neither the Ministry of Finance nor the Bangladesh Bank, the private bank owners’ organization now has sole control over the banking sector. Bank company law and central bank policies are changing at their will. Now Bangladesh Bank is again under pressure to approve new banks. Due to these reasons, fraud cannot be prevented. Bangladesh Bank has issued circulars as requested by bank chairmen for the past few years. Everyone thinks that recently the issue of loan rescheduling has also been done at the request of the chairmen.
In the last 10 years, Anontex, Crescent and Thermex groups together took Tk 11,230 crore from Janata Bank, Tk 4,500 crore went from Basic Bank, Tk 3,547 crore was embezzled in Sonali Bank’s Hallmark scam, Bismillah Group took Tk 1174 crore, another Tk 1,201 crore were lost from the NRB Commercial and Farmers Bank. Bangladesh Bank could not take any visible action against these. Therefore, the managing director of another private bank thinks that fraudsters have become more reckless. He said, “Bangladesh Bank will not be strong until it is able to provide severe punishment to the criminals, there will be no good changes in the banking sector.”
Dr. Salehuddin Ahmed said, “It is not possible for Bangladesh Bank to fix all these things alone. For this, the government’s goodwill is also needed. Good governance should be established in the banking sector. Transparency and accountability must be ensured among all. Those who are guilty, they should be brought under visible justice. The culprits are known to everyone. These initiatives can restore people’s trust in the banking sector.”

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