State-run Janata bank – after five years of insistence from the Bangladesh Bank – finally appointed a firm to conduct a functional audit on AnonTex loan irregularities, which currently amounts to more than Tk 6,000 crore.
Janata bank management appointed Ahsan Kamal Sadeq & CO for this role on July 9, said insiders on condition of anonymity. The bank’s board of directors’ approved this move in its 773th meeting on June 26.
The bank appointed the audit firm just three months after the retirement of its previous managing director and CEO Abdus Salam Azad, who allegedly was involved in the loan irregularities.
Azad retired from the bank on April 29 after serving in the position for five and a half years.
The central bank, since December 2018, has been repeatedly asking the Janata Bank to conduct a functional audit to track down people who were involved in the much-talked about AnonTex loans irregularities.
But the bank decided to comply with this regulatory instruction only recently.
Janata Bank officials, seeking anonymity, blamed the former managing director and CEO Abdus Salam Azad for the delay in the implementation of the central bank directive to conduct a functional audit.
A central bank senior official, preferring not to be named, said the Azad-led management of Janata Bank was not willing to conduct the functional audit as some of its officials were involved with the irregularities.
The Business Post had contacted Janata Bank’s former managing director and CEO Abdus Salam Azad on phone for clarification, but he declined to comment on the issue.
However, the bank’s incumbent Chairman SM Mahfuzur Rahman said, “I did not know about the issue because I joined the bank in July 2020. As far as I know, AnonTex had wanted to repay the loans, so Janata did not take any initiatives to conduct an audit.
“But now, we have appointed an audit firm to conduct a functional audit to comply with the central bank’s regulation.”
Between 2010 and 2015, Janata Bank disbursed around Tk 3,527.9 crore in loans among 22 companies of AnonTex Group, exceeding 25 per cent of the lender’s capital base. The move violates the single borrower exposure limit set in the Bank Company Act 1991.
Now the total loans held by the group stands at Tk 6,528.60 crore, according to data from the Janata Bank. The bank has also yet to take any legal action against AnonTex Group in the last six years.
Speaking to The Business Post, Policy Research Institute of Bangladesh Executive Director Ahsan H Mansur said, “It needs to be investigated how Janata Bank approved such a huge sum in loans to a single business group.
“It is also important to identify and prosecute those who helped AnonTex Group in receiving such a big loan from Janata Bank. Otherwise, criminal offences like this will continue to grow further.”
He added, “Nowadays, we see that if there are any irregularities or corruption, there is no tendency to find out who the real culprits are. The government needs to play a bigger role to bring good governance to the banking sector.”
The state-run Janata Bank used to be one of the country’s top-reputed financial institutions. However, this is far from reality now. The bank’s non-performing loans (NPLs) were at Tk 5,345 crore at the end of 2017, which rose to Tk 14,387crore at the end of 2022.
The bank was facing a Tk 2,389 crore capital shortfall at the end of March this year, Bangladesh Bank data shows. Janata Bank’s 75 per cent loans are concentrated in the five branches, which are very risky.
