Deteriorating public perception on banks

Has taking out money from banks with fake names and addresses become too easy? For this, the cooperation of the owners and management of the respective bank is required. So this is an ominous sign in Bangladesh’s economy and has affected other sectors as well.

When the public finds that banks regularly get involved in unethical practices and scams, the incident of Islami Bank Bangladesh Limited (IBBL) triggered a negative dimension in them.

They got jittery and started to lose confidence in public and private banks. In this post-pandemic period and global unrest, regaining public confidence in the banking sector is necessary to save the economy from further complications.

A recent report revealed that an unscrupulous gang has withdrawn around Tk 70 billion from Islami IBBL through various ways using the names of eight different companies. Of the amount, a whopping Tk 24.9 billion was withdrawn only in the first seventeen days of this month (1-17 November).

The much discussed-about Prashanta Kumar (PK) Halder opened many companies with genuine and fictional names and then took over several financial institutions. He apparently learned his evil designs from the head of another large business group. He used to open companies in this way and withdraw money from the stock market.

The Hallmark-Sonali Bank loan scam is a massive fraud that took place in Bangladesh between 2010 and 2012. State-owned Sonali Bank’s Ruposhi Bangla Hotel branch lent over TK 35 billion ($454 million as of 2011) based on falsified documents. The bank is yet overcome from that shock.

In 2014-15, AnonTex Group withdrew about Tk 5,500 crore from Janata Bank using 22 organisation names. However, Bangladesh Bank’s inspection revealed that only four companies are genuine ones and many exist only on paper. Owners of these companies are the officers and employees of Janata Bank. Most of these loans are non-performing.

The central bank’s inspection also found major irregularities in the vault scam loan in the private sector’s Union Bank. According to the central bank report, TK 18,346 crore of loans disbursed by Union Bank is eligible for default, which is 95 per cent of the total loans of the bank. Similarly, BB found irregularities in Social Islami Bank Limited. However, the two banks have yet to default on these loans. The two banks regularly show the loans by extending and rescheduling the term.

This time, Islami Bank has become a victim of a similar incident. It is impossible to trace the institutions to which the loans have been given. The bank started giving such loans from its Khatunganj Branch in Chattogram. The officers of the bank who help in this regard have been promoted quickly. The responsibility has been assigned to the credit departments. Fake loans are being taken out through this. The tenure of these loans is longer so defaults are not easily incurred.

According to banking sources, businessmen used to take loans from banks in the name of their companies. The central bank imposes limits so that not too much credit goes to an institution. Then the businesspersons started taking loans from government banks using fake names and addresses.

Many people do business only with trading licenses without opening a company and withdrawing money from the bank. They are not returning that money to the bank. Such practice is quite old. The Oriental Bank was almost destroyed because of these reasons. Now the question arises, who will prevent this mismanagement? Why do these elements get away with using fake names and addresses?

These repeated loan scam incidents of similar nature indicate that public and privately owned Bangladeshi banks learned no lesson from the past incidents. They did not take effective measures to prevent the repetition of these incidents.

On the other hand, although cases have been filed in court by banks as well as the Anti-Corruption Commission, the success in recovering the amount lost is very rare. Moreover, in some cases, accused persons are yet to be apprehended. What measures the state has taken to bring financial criminals back from abroad is also unknown.