Tk 408cr shady loan deals of SIBL: BB can’t avoid its responsibilities
Shahjalal Islami Bank Limited finds itself in a quagmire after taking over a loan of the contracting company Dhaly Construction Ltd from another bank and granting new loans worth hundreds of crores of taka to the same company violating banking regulations. Following multiple loan renewals, the company currently owes the Dhanmondi branch of the bank Tk 408 crore.
A report by the central bank highlighted that Shahjalal Islami Bank took over the loan without verifying the customer’s status and simultaneously made additional investments. The bank failed to provide any information regarding Dhaly Construction’s investment-related work orders, project work progress, and verification of equity, among other details concerning the takeover of the original loan from the Dilkusha branch of Trust Bank. It also revealed that the bank’s loan investment violated the directives of its board of directors. The company has already collected the bills of the work orders, which served as the basis for the loan, through other banks. The company had mortgaged collateral consisting of 721 kathas of land and a building spanning over 37,000 square feet as security against the loan.
In November 2015, the company applied to the Shahjalal Islami Bank’s Dhanmondi branch for a takeover of the loan previously held by Trust Bank. Simultaneously, it proposed to mortgage the collateral with a redemption clause. In response to inquiries regarding the company’s cashing of the bills of work orders through other banks, the Bank explained that Dhaly Construction pursued this course of action due to their immediate financial needs. However, when questioned about the violation of the bank’s board of directors’ loan disbursement policy or the specific loan amounts granted against each work order, the deputy managing director refrained from providing any comment or information.
The Bangladesh Bank report reveals that in the loan sanction letter from the bank’s board of directors, dated 28 December 2015, Dhaly Construction was instructed to provide collateral equivalent to the funded investment limit for new debt investments. However, despite the requirement to maintain 100% security against the Tk 188 crore funded loan, collateral worth only Tk 90 crore (land and building) was accepted.
The central bank said the officials of the respective departments within the branch and head office of the bank, as well as the then managing director and board of directors, cannot avoid responsibility for the irregularities. The central bank also cannot avoid its responsibilities.
