Four govt banks hostages to 168 borrowers

Four state-run banks – Sonali, Janata, Agrani, and Rupali – are hostages to 168 borrowers, who have taken out the lion’s share of the loans.

The “favoured” loan approvals have increased the banks’ credit concentration risks while depositors are at risk of loss as the loans have been given to a select few borrowers, said experts.

Sonali Bank’s total disbursed loans stood at Tk 84,600 crore at the end of December last year, with Tk 52,919 crore going to only 23 borrowers, the central bank data shows.

Last year, the state-run bank issued loans amounting to more than 10 per cent of its paid-up capital to Beximco Group, Thermax Group, Hallmark Group, T and Brothers Group, the Directorate General of Food, Biman Bangladesh Airlines, Payra Port Authority, Sonali Bank UK, BRAC, Bangladesh Chemical Industries Corporation, Bangladesh Agricultural Development Corporation, Bangladesh Water Development Board, Bangladesh Sugar & Food Industries Corporation, and Trading Corporation of Bangladesh.

Of the large borrowers at Sonali Bank, three hold default loans of Tk 6,627 crore.

Janata Bank’s total disbursed loans were Tk 84,282 crore while Tk 61,976 crore (73.53 per cent) went to 61 borrowers. Of the 61, four are public sector and the rest are private sector borrowers.

Of the Tk 61,976 crore loans, Tk 54,525 crore are funded loans and Tk 7,451 crore are non-funded loans, as per the central bank data. 14 of the bank’s large borrowers have Tk 8,458 crore in default loans.

A senior official of the bank told The Business Post the top five branches disbursed 75 per cent of the bank’s total loans.

He also said three branches – Janata Bhaban Corporate, Local Office, and Sadharan Bima Bhaban Corporate – disbursed 60 per cent of the total loans.

Janata Bank’s financial health has deteriorated mainly because of several big borrowers, including AnonTex Group and Crescent Group.

The bank lent up to Tk 10,000 crore to the two groups, going past its single-borrower exposure limit, according to a central bank investigation. The investigation report further said AnonTex, a garment manufacturer, was involved in money laundering.

Agrani Bank’s total disbursed loans amounted to Tk 71,451 crore at the end of December last year. Of this, Tk 29,734 crore was taken out by 51 borrowers.

Of the 51, seven are public sector and 44 are private sector borrowers. The loans that went to them include funded loans of Tk 23,745 crore and non-funded loans of Tk 5,989 crore.

Besides, 42 per cent of the bank’s credit is concentrated among the top five branches while nine borrowers hold Tk 5,003 crore in default loans.

Rupali Bank disbursed Tk 15,471 crore in loans among 33 borrowers while its total disbursed loans were Tk 43,540 crore at the end of December last year.

The bank's four large borrowers hold Tk 1,031 crore of default loans while the top five branches disbursed 55 per cent of the total loans.

Beximco, Orion Group, Mother Textile Mills, Madaripur Spinning Mills, Badar Spinning Mills, and Dolly Construction are among the bank’s large borrowers.

Political interference in approving loans is widespread in the government banks, said Zahid Hussain, former lead economist of the World Bank’s Dhaka office.

This is the main reason behind the large loan concentration among a few borrowers, he said.

He also said the government banks prioritise most of the weak state-run companies while disbursing loans and the latter fail to repay.

The banks cannot avoid blame and responsibility for the soaring default loans because they are approving loans without due diligence or considering the repayment capacity of borrowers, as per the economist.

This is the last part of the three-part series