Home ›› 02 Oct 2022 ›› Front
Three Shariah-based banks – Islami Bank Bangladesh Ltd, First Security Islami Bank Ltd and Social Islami Bank Ltd – approved Tk 6,370 crore in loans under easy conditions to Nabil Group, a relatively new conglomerate in the country’s North Bengal region.
These lenders approved the loans, both funded and non-funded, during their respective board meetings held throughout June this year, according to the meeting minute copies collected by The Business Post.
The correspondent also collected copies of Bangladesh Bank observation reports on the three banks, which termed the loans provided to Nabil Group as “risky and suspicious,” as most of the group’s companies are newly established and small.
On condition of anonymity, a central bank official said the regulator plans to ask for an explanation from Islami Bank Bangladesh Ltd, First Security Islami Bank Ltd and Social Islami Bank Ltd on why they approved such a large amount of loans under easy conditions to a new business.
The banking regulator is also planning to dig for information about the backgrounds of company directors, and launch a detailed investigation on the matter, the official said.
Commenting on the matter, senior banker and former chairman of the Association of Bankers, Bangladesh (ABB) Mohammed Nurul Amin said, “The situation is very bad. These businesses, who took out such big loans, may not have any intention of repaying what they borrowed.
“Some influential groups may be involved in the loan process. The Bangladesh Bank should strengthen its monitoring system and launch an investigation to find out how such a new business managed to borrow such a large amount from these three banks.”
The Business Post made calls and sent text messages to the managing directors Mohammed Monirul Moula of Islami Bank Bangladesh Ltd, Syed Waseque Md Ali of First Security Islami Bank Ltd and Zafar Alam of Social Islami Bank Ltd for their comments on the matter, but they could not be reached till the filing of this report.
IBBL approves Tk4,050cr in loans
On June 5 this year, the Islami Bank Bangladesh Ltd (IBBL) – in their 1,970th executive committee meeting – approved at Tk 950 crore as loans to new client Nabil Grain Crops Ltd, to be disbursed from the bank’s Gulshan branch.
During that period, the company had only Tk 8.5 lakh exposure in several banks and non-bank financial institutions, according to their CIB (Credit Information Bureau) report.
The company belongs to the marginal category (new company) as per the Internal Credit Risk Rating System (ICRRS), said the Bangladesh Bank in its observation report.
Central bank officials say the IBBL should have taken at least Tk 230 crore as collateral, including Tk 110 crore as deposits, from the company. As such safeguards are not mandatory under the easy loan condition, the loans are very risky.
The IBBL Rajshahi branch approved Tk 3,100 crore as loans to a number of Nabil Group companies, including Tk 700 crore to Nabil Feed Mills Ltd in June.
In the meeting minutes, the bank claimed that Nabil Feed Mills Ltd and Nabil Grain Crops Ltd are not companies of the same group. However, the central bank suspects that both those companies belong to the Nabil Group.
If this is the case, then the IBBL has exceeded the single borrower exposure limit, which is a violation of The Bank Company Act, mentions the central bank’s observation report.
SIBL approves Tk1,120cr in loans
On May 30 this year, Social Islami Bank Ltd (SIBL) – in its 481th board meeting – approved Tk 1,120 crore (both funded and non-funded) in loans to Nabil Feed Mills Ltd, Nabil Naba foods Ltd and its associate companies.
A central bank observation report mentions that the SIBL had eased its regulations and conditions for approving loans to businesses under Nabil Group, and the loans are risky.
The lender lowered LC commission, and provided relief from depositing collateral and personal guarantee, the report added.
Central bank officials say the regulator plans to launch an investigation to find out whether the SIBL is offering any kind of illegal benefits to this client, and whether the company is an affiliated institution of any directors of this bank.
FSIBL approves Tk1,200cr
On 23 June this year, the First Security Islami Bank Ltd – in its 246th board meeting – approved Tk 1,200 crore in loans (both funded and non-funded) to Nabil Feed Mills Ltd, Nabil Naba foods Ltd and Shimul enterprise.
The banking regulator is planning to seek information from the bank on why it approved such a huge amount in loans to those companies. It will also seek information on the background of the company directors.
Most of the directors of the three Shariah based banks are from a Chittagong-based business family, and the central bank suspects that these directors are involved in getting the Nabil group large amounts of loans under easy conditions, insiders say.
Seeking anonymity, several Bangladesh Bank officials claimed those three banks violated their own rules to approve the huge amount of loans.
Bad loans status of three lenders
At the end of June of this year, Islami Bank Bangladesh Ltd’s non-performing loans stood at Tk 4510.73 crore, Social Islami Bank Ltd’s NPLs stood at Tk 1628.79 crore, and First Security Islami Bank Ltd’s bad loans stood at Tk 1985.12 crore, show latest data from the Bangladesh Bank.
Most of the companies under Nabil Group are newly established, but the group’s web portal claims that it is one of the biggest and leading conglomerates in the North Bengal region of Bangladesh.
When contacted, Nabil Group Managing Director Md Aminul Islam said, “We have good cash flow, and that is why those banks lend money to our group. Those lenders would not have financed our group had we not been a renowned business entity.”
