Yet another loan scam, yet another central bank failure
Published: 00:00, Dec 01,2022
YET another loan scam, dealing a severe blow to the banking sector, has hit the economy. The Chattogram-based S Alam Group has taken out about Tk 300 billion in loans form Islami Bank Bangladesh Ltd, the largest commercial bank in the private sector, that the group controls. The amount taken out in loans is way beyond what the group is entitled to, which is Tk 2.15 billion, keeping to the bank’s rules, as a Bangladesh Bank audit report says, noting that the loan transaction has been done employing various unethical means. Some officials of both the central bank and Islami Bank suspect that the group along with some associates may have so far appropriated about Tk 1,000 billion from about a horde of banks, but mostly from Islami Bank, that the group controls. A recent loan scam of about Tk 68.35 billion, which took place in Islami Bank in April–November, was reported early this week. The bank is feared to have extended the loans on political consideration. A series of loan scams have taken place after the Awami League government assumed office in 2009. And, in almost all the cases, it is the central bank which is to blame, either for overlooking the problems or for not taking stringent action in time.
The Crescent Group swindled Tk 35.72 billion, which came to light around 2015, and AnonTex embezzled Tk 55.08 billion in the 2019 financial year from Janata Bank. The Bismillah Group swindled about Tk 11 billion from Janata Bank in 2012, the Hallmark Group misappropriated about Tk 35 billion from Sonali Bank in 2013 and BASIC Bank lost more than Tk 60 billion by way of fictitious loans extended by the bank’s board. Experts say that the central bank has not taken any action against such unprecedented borrowings through various irregularities and it has, rather, facilitated such unlawful lending. A senior central bank official says that the Bangladesh Bank has not allowed its officials to conduct inspections of the banks and has not approved the inspection reports or has never taken action based on the reports. Such indolence, said to be deliberate, has only put the whole of the banking sector in jeopardy. Central bank officials suspect that the group has not used major portion of the loans in the entities for which the loans have been taken out as the group can in no way invest such a huge amount of money in such small-sized companies. The minister for finance, at an event meanwhile on November 29, has asked for specific evidence of loan scams when reporters sought his comments. The minister conveniently forgets that it is his duty to investigate any such allegations whenever they come up.
While, in such a situation, the government must lay its hands off the process of loan disbursement, it must find out the quarters, within the central bank and outside, responsible for the scam at hand and others that took place earlier and take stringent action against them. The government must also make the central bank behave and allow it to run its course in plugging the loopholes in the banking sector.
YET another loan scam, dealing a severe blow to the banking sector, has hit the economy. The Chattogram-based S Alam Group has taken out about Tk 300 billion in loans form Islami Bank Bangladesh Ltd, the largest commercial bank in the...
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