Janata Bank loan default: Why won't officials be held accountable?

While other state-owned banks were in bad financial condition, Janata Bank was in good shape. There was a balance between their capital and loans. The bank had also done quite well.

But after the Awami League government came to power in 2009, the default loans kept growing due to political appointments in the board of directors of this bank, as in other state-owned banks.

The situation took such a turn that at one point a special allocation had to be made in the budget to run the state-owned banks.

While the situation improved somewhat, the default loans in Janata Bank continued to increase because of haphazard disbursement of loans. The bank couldn’t recover due to the chairman’s whims and the managing director’s nepotism.

When Abdus Salam Azad took responsibility of the bank as the managing director back in 2017, the amount of loan disbursed by the bank was Tk 459.58 billion (45,958 crore). The amount of default loan among that was Tk 76 billion (7,600 crore).

Now the bank’s loan disbursement has increased to Tk 852.06 billion (85,206 crore) and the default loan has rose to Tk 143.87 billion (14,387 crore). That means the loan disbursement and default loan has almost doubled in the past five and a half years.

There’s a law that more than 25 per cent of the capital cannot be lent to a single group. If loans more than that is disbursed, it turns into a huge risk for the bank. Abdus Salam Azad’s tenure is ending on this 29 April.

Incumbent managing director without taking responsibility of the bank’s condition wants to blame it onto the former chairman and managing directors. Meanwhile, former officials say, they did everything according to rules. Then who’s responsible for this situation?

As reported by Prothom Alo, AnonTex, Crescent Group and quite a few influential businessmen are the top loan defaulters of Janata Bank. Among these loan defaulters, there are also such businessmen who have tried to buy out the topmost loan defaulter’s company getting the bank interest to be waived.

It’s not that loan scams have happened only in Janata bank during the tenure of the current government. There have been loan scams in Sonali Bank and Basic Bank too. Also, there are allegations that so called entrepreneurs and politically influential people have taken billions of taka in loans and have siphoned them off abroad.

Banks are monetary institutions run of several rules and regulations. The bank authorities will give loans only to those from whom they can recollect the loan. Banks are bound to go bankrupt if they lend based on other considerations or political influence.

The amount of default loans in state-owned banks is skyrocketing excessively, but has any chairman, board member or managing director been held accountable for that? If they had been, then the officials of Sonali Bank, Basic Bank and Janata Bank would not have been exempted of liabilities like this.

Even if the issue of bank loan scam sometimes escalates to a lawsuit, invisible strings do away with such cases. It needs to be investigated whether something like that is happening in the case of Janata Bank as well.

Another major setback in running state-owned banks is dual governance. As the guardian institution, it is Bangladesh Bank that monitors the matter of income and expenses of these banks.

But for the unwarranted interference of the Financial Institutions Division of the finance ministry, it is not possible to take legal action on their part as well. For the state-owned banks to be run properly, dual governance too needs to end.