State-owned Janata Bank provided a loan of Tk 2.25 billion to the Globe Janakantha Group, on recommendations of Salman F Rahman, the private sector and investment advisor of former prime minister Sheikh Hasina who was ousted from power amid the student-people's uprising on 5 August.
Currently, this loan is fully defaulted. The defaulted amount owed by the Globe Janakantha Group to Janata Bank has now exceeded Tk 8 billion.
In August 2020, Salman F Rahman wrote a letter to the chairman of Janata Bank, requesting a loan for Globe Janakantha.
Currently, this loan is fully defaulted. The defaulted amount owed by the Globe Janakantha Group to Janata Bank has now exceeded Tk 8 billion
He stated that the organisation had suffered due to the BNP-Jamaat government and requested special consideration for the loan application. Subsequently, Janata Bank granted the loan to Globe Janakantha in 2021.
However, documents reveal that at that time, the Globe Janakantha Group was unable to fulfill any conditions for new loans. The relevant branch of Janata Bank also commented that if a new loan were issued, it would likely default again.
The government’s Commercial Audit Department reported that granting a new loan to this group would result in a certain loss of Tk 3.93 billion for the bank.
Due to non-repayment, Sonali and Janata Banks had previously waived Tk 2.67 billion in interest on the Globe Janakantha Group's loans.
Despite that, a new loan was granted solely because of Salman’s letter. Notably, Salman F Rahman is currently imprisoned following his arrest in a murder case.
The Globe Janakantha Group comprises five companies: Globe Metal Complex, Globe Insecticides Limited, Globe Cables, Janakantha Limited, and Globe Janakantha Group.
Due to non-repayment, Sonali and Janata Banks had previously waived Tk 2.67 billion in interest on the Globe Janakantha Group's loans. Despite that, a new loan was granted solely because of Salman’s letter.
Except for the newspaper Janakantha and Globe Insecticides Limited, the activities of the other companies have been irregular. They have been receiving special advantages in securing bank loans for almost three decades.
Globe Janakantha Group chairman Mohammad Atiqullah Khan Masud passed away in March 2021. He was also the editor and publisher of the Janakantha newspaper.
Janata Bank managing director (MD) Abdul Jabbar was removed last Thursday. Before his removal, he stated in an interview with Prothom Alo on Wednesday that all old and new loans of the group had become defaulted, and efforts were being made to recover these loans.
Benefits granted to Globe Janakantha
Initially, Sonali Bank was primarily financing the Globe Janakantha Group. Following the Hall-Mark scandal in 2012, the Globe Janakantha Group turned its attention to Janata Bank.
On 30 December 2013, the board of directors of Janata Bank approved a loan of Tk 2.37 billion, acquiring the loan from Sonali Bank.
Of this amount, Tk 1 billion was used to purchase the loan from Sonali Bank. At the same time, Sonali Bank waived Tk 1 billion in interest. Janata Bank provided Tk 1.2 billion as working capital and Tk 170 million for modernisation, expansion, and renovation of ongoing projects.
I am trying to ensure that the organization can turn around. We have some land that is not mortgaged to the bank. We plan to sell this to regularize the bank loanAfizur Rahman, the chief operating officer of the Globe Janakantha Group
However, after the installment payments became irregular, the group rescheduled the loan twice. Under a special provision for defaulters, the Janakantha Group rescheduled the loan for the third time on 30 December 2019. At that time, they were granted a one-year moratorium on loan repayments.
Additionally, the bank waived Tk 1.67 billion in interest. The installments for this loan were set to begin in December 2020. However, before that, the Globe Janakantha Group attempted to secure a new loan from the bank.
How the new loan was secured
On 12 March 2020, Mohammad Atiqullah Khan Masud applied for a loan of Tk 2.5 billion from Janata Bank's Dilkusha branch. He also requested the acquisition of a loan of Tk 90 million that Globe Janakantha had taken from NCC Bank.
However, Janata Bank did not respond to this application. Shortly thereafter, Salman F Rahman wrote to the chairman of Janata Bank.
Salman’s letter was forwarded from then-chairman Mahfuzur Rahman to the bank’s then-managing director Abdus Salam Azad.
He instructed the deputy managing director of the loan department to “work on this matter and inform me so we can present it to the board quickly.”
On 27 September 2021, the board of directors of Janata Bank approved a loan of Tk 2.25 billion for the five companies of Globe Janakantha.
the primary eligibility for receiving a loan is the borrower’s business condition. It is predictable that loans granted based on someone’s recommendation, without assessing this condition, will not be recoverableFormer chief economist of Bangladesh Bank Mustafa K Mujeri
The Bangladesh Bank granted approval for this loan on 2 November of the same year.
When asked, Afizur Rahman, the chief operating officer of the Globe Janakantha Group, told Prothom Alo, “I am trying to ensure that the organization can turn around. We have some land that is not mortgaged to the bank. We plan to sell this to regularize the bank loan.”
Bank officials had presented various irregularities to the board regarding the decision not to grant new loans to the Globe Janakantha Group. It was stated at that time that it was not possible to assess the group's ability to repay loans due to the closure of its businesses.
Besides, the board was informed that obtaining previous loans without verifying the business's viability and causing financial losses to Janata Bank warranted action against the officials involved, as asked by the Bangladesh Bank. However, the board did not take these objections into account.
Currently, Janata Bank is one of the banks with a very high rate of defaulted loans. Due to defaulted loans from certain clients, like the Globe Janakantha Group, nearly half of the loans issued by this bank are now in default.
Salman F Rahman, who advocated for lending to Globe Janakantha, owns the Beximco Group, which is one of Janata Bank's top clients, with loans amounting to nearly Tk 250 billion.
According to the latest figures until June, Tk 180 billion of the loans taken by Beximco from Janata Bank are already in default.
Speaking to Prothom Alo, former chief economist of Bangladesh Bank Mustafa K Mujeri said the primary eligibility for receiving a loan is the borrower’s business condition.
It is predictable that loans granted based on someone’s recommendation, without assessing this condition, will not be recoverable, he pointed out.
Mujeri said those who approved the loans must be held accountable.
*This story, originally published in Prothom Alo print and online editions, has been rewritten in English by Rabiul Islam.