Rupali Bank lends Tk 1.9b to unscrupulous fish exporters

Rupali Bank Limited

Three firms have have taken loans of Tk 1.90 billion from state-owned Rupali Bank using fake documents on fish export, two initial investigations have found.

These companies prepared fake invoices, otherwise known as Foreign Bill Purchases, to export fish and sold those to state-owned Rupali Bank Limited for Tk 1.50 billion, and also received Tk 400 million in cash assistance from the government for fake export.

A special inspection team of Bangladesh Bank and an internal team of Rupali Bank unveiled this embezzlement that took place at the Rupali Bank’s Shams Building corporate branch in Khulna during their investigations.

Both teams are now working separately to investigate the incident and identify the people responsible.

Three companies facing the allegations are Priam Fish Export Limited, Bionic Sea Food Export Limited and SM Corporation, and the first two of these companies are members of the Bangladesh Frozen Food Exporters Association.

Meanwhile, Rupali Bank has suspended two officials following the incident. They are the deputy general manager and former manager of the Shams Building branch Zakir Ibne Borak and senior principal officer Murad Hossain.

The incumbent manager of Rupali Bank’s Shams Building corporate branch, Bilkish Ara, said an audit team from the head office inspecting the matter. She was reluctant to speak further over the matter to Prothom Alo and advised to talk to the bank’s head office.

When contacted, Rupali Bank managing director Mohammad Jahangir said, “These firms are our old clients. They even received fisheries awards. We are trying to recover the additional money taken by those firms, and a portion of the money has already been recovered too.”

Way of embezzlement

All of those three firms, which export frozen fish, are old clients of Rupali Banks’ Shams Building corporate branch. Of them, Priam Fish Export Limited also bagged the national fisheries award. As a result, the bank has trust on these clients.

According to sources, since these three companies were exporting firms, Rupali Bank maintained a liberal policy towards them amid the dollar crisis that.

As there is no necessity to import raw materials, entire earnings from fish export are added to the country’s dollar supply. Bank officials sanctioned funds presuming that financing them as per demands will boost export earnings and dollar supply, and those firms took advantage of it.

Banks purchase export bills from exporting companies and provide funds for the respective firms. When export earnings arrive the banks adjust their arrears and commission, and give the remaining portion to their clients.

Usually, apparel exports enjoy such facilities. For exporting fish and vegetables, money arrives first and goods are delivered later. And these three firms prepared fake invoices and managed to sell those to the banks to get the money.

According to officials concerned of the Bangladesh Bank and the Rupali Bank, these three firms received Tk 1.50 for fake export invoices and Tk 400 million as subsidy from the government funds for the export sector.

Priam Fish operates a factory in the Char Rupsha area of Khulna’s Bagmara and Abdul Kader is its margining director while Bionic Sea Food has an office on KDA Avenue in Khulna and Siddiqur Rahman is its margining director. However, nothing was found on SM Corporation.

When contracted Priam Fish MD Abdul Kader told Prothom Alo, “I export fishes of Tk 1.80-1.90 billion every year through that branch of Rupali Bank. I also receive government incentives regularly. And nothing such happened yet.”

Bionic Sea Food MD Siddiqur Rahman did not respond to Porthom Alo for comment.

Lending six times more than deposits

The Rupali Bank’s Shams Building corporate branch is known as “the branch of Khulna fish traders.” This branch lent six times more than the deposits it received. The amount of deposits was Tk 1.47 billion at this branch at the end of August while its loan outstanding was Tk 9.06 billion.

This branch mainly lent to firms taking funds from the head office. Although the branch bought huge amount of Foreign Bill Purchase (FBP) or export bill, the matter did not come to the head office’s notice. Questions also arose about where this huge amount of loans went.

Several officials of Rupali Bank’s head office told Prothom Alo there was obviously a big fraud. Where the entire bank does not buy FBP of Tk 500 million, how could a single branch in Khulna purchase bills of Tk 1.5 billion? If rules were followed it would be on hold at the very beginning.

Bangladesh Bank officials said such discrepancies had taken place in this branch before and they did not listen even after repeated warnings.

Deposits at Rupali Bank increased to Tk 606.02 billion in June 2023 from Tk 472.77 billion in 2020 while the amount of loans rose to Tk 458.60 billion from Tk 319.50 billion during this period. Deposits increased by Tk 193.25 billion and loans by Tk 139.10 billion in these three years. The amount of defaulted loans doubled in the past three years rising to 82.44 billion in June 2023 from Tk 41.67 billion in June 2020.

As the bank’s provision shortfall widened against its loans and other investments, Rupali Bank took additional time from the central bank.

In 2022, Rupali Bank enjoyed the central banks’ rules on loan relaxation and posted Tk 210 million in profits.

The Bangladesh Bank instructed the bank to keep Tk 81.80 billion in provision to finalise its annual financial statement, instead, Rupali Bank managed to maintain Tk 21.33 billion, and the central bank allowed Rupali Bank to add the remaining Tk 60.84 billion in provision within 2023. As a result, the bank managed to make Tk 210 million in profits.

However, Rupali Bank, the lone state-owned bank listed in the stock market, announced no dividend for its shareholders at capital markets and 7 per cent of its total shares are listed in stock markets.

Embezzlement of Gopalganj’s Joynagar branch

About Tk 160 million was also embezzled from Rupali Bank’s Joynagar branch in Gopalganj. Branch manager Mofizur Rahman is on the run since the incident came to light. The bank suspended Mofizur Rahman, deputy general manager of this area Abdul Mannan and officer Shahidul Islam over this incident.

Rupali Bank chairman Kazi Sanaul Hoq did not respond to Porthom Alo’s repeated calls for comment.