The state-owned Janata Bank (JB) has given loans worth Tk 21,978 crore to various institutions of the Beximco Group without following the appropriate rules of the Bangladesh Bank (BB), official sources said.
According to BB rules, a bank can lend a maximum of 25 percent of its capital (funded and unfunded) to a single borrower. But in Beximco’s case this particular rule has been violated. The bank has given loans equivalent to 949.78 percent of its capital to the group.
Janata Bank did not comply with several letters asking for the group’s overall information. The bank gave the information of only two institutions of the group to the central bank. The matter came into discussion after Beximco applied for a new loan of Tk 479.36 crore and the ban bank applied for permission from the central bank.
According to the inspection report of BB, the bank, in its 778th board meeting on July 25, decided in principle to give the loan to 26 companies of Beximco Group under special consideration and seek BB’s permission to sanction the loan. The BB has given permission to Janata Bank for lending to Beximco despite violation of rules.
The 26 companies of the Beximco Group that received loan facility from Janata Bank under special consideration are 1. International Knitwear and Apparels Ltd., 2. International Knitwear and Apparels Ltd. (Unit-2), 3. Crescent Fashions and Design Ltd., 4. New Dhaka Industries Ltd., 5. Shinepukur Garments Ltd., 6. Escop Apparels Ltd., 7. Beximco Fashions Ltd., 8. Bextex Garments Ltd., 9. Aces Fashions Ltd., 10. Bay City Apparels Ltd., 11. Peerless Garments Ltd., 12. Platinum Garments Ltd., 13. White Bay Apparels Ltd., 14. Cozy Apparels Ltd., 15. Pink Maker Garments Ltd., 16. Autumnloop Apparels Ltd., 17. Kanchpur Apparels Ltd., 18. Adventure Garments Ltd., 19. Cosmopolitan Apparels Ltd., 20. Midwent Garments Ltd., 21. Apollo Apparels Ltd., 22. Urban Fashions Ltd., 23. Sky Net Apparels Ltd., 24. Springful Apparels Ltd., 25. Winter Sprint Garments Ltd., and 26. Yellow Apparels Ltd.
Earlier, in the 776th meeting of the board of directors of the bank on July 18, a back-to-back LC of Tk 124.48 crore in favour of Beximco Limited and a temporary advance of Tk 124.64 crore in favour of Crescent Fashions and Design (approx.), back-to-back LC of Tk 40.39 crore and packing credit facility of Tk 12.92 crore, back-to-back LC of Tk 48.65 crore and packing credit facility of Tk 11.12 crore (approx.) in favor of International Knitwear & Apparels, back-to-back LC of Tk 48.26 crore and packing credit facility of Tk 11.92 crore in favor of New Dhaka Industries and back-to-back LC of Tk 49 crore and packing of Tk 11.98 crore in favor of Shinepukur Garments were approved. A total loan of Tk 479.36 crore including credit facility was approved in the meeting. Of this, Tk 306.78 crore is non-funded and Tk 172.5 crore is funded loan.
BB data says, Beximco Limited and its other 29 institutions have funded liabilities of Tk 21,612.54 crore, which is 933.99 percent of the bank’s paid-up capital of Tk 2,314 crore.
Apart from this, the combined liability of funded and non-funded loans is Tk 21978 .3 crore (total debt calculated with 50 percent of non-funded debt), which is 949.78 percent of the bank’s capital.
At the moment, if Tk 479.36 crore are approved in favor of various institutions of Beximco Group, the funded liability of Beximco Limited and its other institutions in the bank will stand at Tk 21785.12 crore, which is 941.45 percent of the paid up capital of the bank. And the total liability of funded and non-funded will be 22304 crore, which is 963.87 percent of bank capital.
According to the agreement signed with BB, the customers’ loans have become ‘non-conforming’ due to the reduction of the bank’s paid-up capital. If a customer’s credit is non-compliant, no new credit can be given to him. In this case, new loans were given to all the customers in violation of banking rules and regulations.
Despite repeated attempts, The News Times could not reach Md Abdul Jabber, Managing Director and Chief Executive Officer of Janata Bank for comment.
BB spokesperson and Executive Director Md Mezbaul Haque told The News Times that the central bank announces the policy, but the responsibility of the bank’s board is to implement it. The board of Janata Bank has to take a decision on it, he added.
