Janata Bank has rescheduled a staggering amount of defaulted loans in favour of two influential business giants – BEXIMCO and S Alam -- in the July-September period.
Thanks to the move, the state-run bank saw a Tk 115 billion decline in its non-performing loans (NPL) during the period, while the bad loan ratio dropped from 30 per cent to 18 per cent and all other financial indicators showed positive performance.
According to board of directors documents, the two business groups had nearly Tk 137 billion of defaulted loans rescheduled in the July-September quarter.
Responsible officials of the bank confirmed the information.
Once, Janata Bank was a reputed financial institution for funding entrepreneurs, but has long been grappling with defaulted loans.
Earlier, the banking sector regulator, Bangladesh Bank, instructed Janata Bank to reduce its defaulted loans to 10 per cent, but it remains far behind the target. Hence, the regulator has appointed observers and coordinators to the bank for more than the last ten years.
We are maintaining communication so that these loans do not fall into default again.
The bank is also struggling to repay the dollars borrowed from the central bank's Export Development Fund (EDF). In the aftermath, its clients are failing to avail the EDF facilities.
It is widely recognised that an influential business group is responsible for the bank’s current predicament.
How bad loans fall
According to documents, Janata Bank saw the defaulted loan volume doubled from Tk 169.5 billion in March to Tk 286.65 in June.
Later, the amount plummeted to Tk 171.28 billion in September, while the ratio dropped from 30.43 per cent to 17.99 per cent.
A lion’s share of the defaulted loans was allegedly disbursed through irregularities.
The bank rescheduled Tk 85.8 billion of bad loans for the BEXIMCO Group and Tk 52.69 billion for the S Alam Group during the July-September period. In the aftermath, its defaulted loan volume dropped by Tk 139.49 billion.
Meanwhile, some other entities joined the list of defaulters and squeezed the overall reduction amount to Tk 115.37 billion.
BEXIMCO Group had a loan of Tk 232.8 billion in June, while the S Alam Group's loan was 96.09 billion.
Abdul Jabbar, managing director of Janata Bank, said they have rescheduled default loans for certain corporate clients.
“We are maintaining communication so that these loans do not fall into default again. Hence, different indicators of the bank have shown improvement. We are trying to take the bank’s overall condition to a good state.”