NBL restricted from issuing over Tk10cr loan

The Bangladesh Bank has restricted the National Bank Ltd (NBL) from issuing loans amounting to more than Tk10 crore.

A central bank letter sent to the bank on Sunday stated that the initiative has been taken to protect depositors, and ensure proper implementation of a MoU previously signed between the regulator and NBL to improve its financial health.

This letter adds that the central bank’s prior approval is now mandatory if the bank wants to issue loans over Tk 10 crore. It also asked the bank not to reschedule previous loans without any cash recovery, and not to open letters of credit (LCs) without 100 per cent cash margin.

The NBL has also been restricted from taking over loans from other banks. The bank is now only permitted to issue agriculture, working capital, SME and consumer loans and loans under the central bank refinance scheme up to maximum at Tk 10 crore.

Back in May 2021, the central bank imposed a similar restriction on this private bank, but later relaxed it.

Before the move, the bank’s Managing Director and CEO Md Mehmood Husain stepped down from his position citing personal reasons as an excuse on January 18. Husain had joined the bank as managing director in December 2021.

He is not the only person to resign from the post of NBL managing director. Shah Syed Abdul Bari also resigned from his position showing health conditions as a cause in November of 2021.

On August 21 last year, the Bangladesh Bank had signed a Memorandum of Understanding (MoU) with the National Bank in a bid to improve its financial health, as it had continued to deteriorate due to significant loan irregularities.

The Business Post correspondent tried to reach out to former managing director of NBL Mehmood Husain on phone, but he did not respond till the filing of this report.

After the then National Bank Chairman Zainul Haque Sikder’s death, his wife Monowara Sikder became chairman. Their daughter Parveen Haque Sikder and two sons Rick Haque Sikder and Ron Haque Sikder are also on the board of directors.

The bank is now facing several crises due to credit card irregularities and high amount of non-performing loans.

At the end of last September, the amount of defaulted loans of NBL stood at Tk 11,335 crore, which is 27.46 per cent of the total disbursed loans of the bank.