Midland Bank on Wednesday sent a rejoinder to a report titled – ‘Anwar Ispat takes Tk 50cr out of Midland Bank’ published in Dhaka Tribune on March 31. It says, the Midland Bank found the report incomplete, defamatory and lacking in full clarity.
The following is what they wrote in the rejoinder:
The report sets the tone that it was a mistake on the part of Midland Bank Limited to disburse a loan to Anwar Ispat, which the report claimed was done engaging in a fake transaction using a fake supplier’s account, named “SPS Trading.” In this connection, we want to mention, we made the loan disbursement to the designated supplier of “Anwar Ispat Limited” at their request and issued Pay Orders, exactly as per approval condition of the loan and also in line with industry practices. Later, the loans were adjusted in due course. In the report, it was reported, after disbursement of the loan from our Bank in favour of the supplier, the funds were again taken back to Anwar Group’s account through City Bank Limited creating the ground to term the transaction as fictitious having no valid purpose.
In this regard, we would mention that, usually, banks ensure proper utilisation of funds by making the payments directly to the designated supplier as per client’s request, which we had done. Once we acted as per client’s instruction in conformity with the purpose of the loan extended, it was not possible to further track the movement of the funds from beneficiary’s Bank which in this instance was The City Bank Limited.
We further wish to state, as per SRO no 172/2019/29 VAT dated 13th June 2019, the subject item against which the transactions took place, is a VAT exempted item for which reason the client didn’t pay any VAT against the transaction. Consequently, Midland Bank could not provide any VAT related documents to the Bangladesh Bank Inspection Team who had reviewed the transactions.
As regards the raising Tk 70 crore from the public, Midland Bank indeed intends to do so through IPO, to fulfill its licensing terms set by Bangladesh Bank during its formation in 2013. Our regulator, Bangladesh Bank, has already approved the capital raising and we are in the process of seeking permission from the securities regulator, Bangladesh Securities and Exchange Commission, for the IPO. It is relevant to mention, Midland Bank will eventually need to raise Tk 569 crore via IPO, as per its licensing terms, which has to be the equivalent amount of its paid-up capital. As the Bank is strongly capitalised with a capital adequacy ratio of 17.44%, well above the required ratio of 12.50%, Bangladesh Bank allowed relaxation allowing raising the minimum IPO amount as per current regulation, which is Tk 70 crore. In doing so, Midland Bank intends to share the healthy earnings it generates with the public, once it becomes a public listed company.