Two unauthorised branches of a major private bank have been caught stealing clients’ identities and using them to forge loans in an attempt to steal money.
In a serious breach of banking regulations, Prime Bank was found by Bangladesh Bank to be operating two unauthorised bank branches involved in identity theft and loan application forgeries.
The central bank slapped Prime Bank with a Tk10 lakh fine.
The central bank probe said that a large number of loan accounts at the two unlawful branches, including a $30 million disbursal to a non-resident subsidiary institution, may also be fraudulent. A Tk172.5 crore ($22 million) land acquisition in the capital’s Gulshan area is also under scrutiny.
Bangladesh Bank began investigating allegations of identity theft and false loans at the two branches after receiving a complaint filed by a client whose identity was used in the forgery.
A letter was yesterday sent to the offending bank asking that the Tk10 lakh fine be paid within 14 days. The penalty will be deducted from Prime Bank’s current account deposited with Bangladesh Bank if it fails to pay on time, according to the letter.
The central bank governor approved the fine on July 10. According to the investigation report, the bank has been operating two unauthorised branches, the SME Division on Rajuk Avenue and the Retail Banking Division in Gulshan, since 2010 and 2011, respectively.
Business was being conducted at the two branches without any approval from either Bangladesh Bank or even Prime Bank’s board, the probe report said.
In response to queries from the central bank, Prime Bank admitted to the offence and apologised.
The investigation found that a forged loan account of Tk3 lakh was created against client Abu Sayed Md Shahidul Haque by the Retail Banking Division branch in Gulshan.
Although the client had not borrowed money from the bank, his name, identity card, photograph and identifying details were used to forge the loan account.
Luminas Private Limited was appointed to verify loan applications at the branches, but approval was not taken from the board to appoint Luminas.
Prime Bank informed Bangladesh Bank that Luminas had been appointed the contact point verification institution by a former Prime Bank managing director.
Luminas was not assigned any more work after revelations of irregularities surfaced, according to Prime Bank’s reply to central bank investigators.
Central bank investigators recommended that Haque be absolved of any responsibility for the forged loan and that punitive action be taken against the officers responsible and the former managing director of the bank.
The central bank probe discovered the existence of five more loan accounts believed to be forgeries and 23 clients who could not be reached at the numbers they had submitted to the bank.
The investigating team believes a large portion of the loans disbursed through the unapproved branch is fake, according to the investigation report.
The bank branch is also believed to have disbursed loans of $30m against non-resident subsidiary institution, PBL Finance (Hong Kong) Limited, violating the Foreign Exchange Regulation Act, 1947.
The salaries and allowances of two officials of PBL Finance was paid by Prime Bank, violating the conditions of PBL Finance’s license.
Most of the building in Gulshan, bought for Tk172.50 crore, ostensibly to house the Prime Bank head office, remains unused. The respective department of the central bank has been asked to take necessary measures in this regard as well, according to the recommendations of the probe report.
Azam Chowdhury, chairman of Prime Bank, and Ferdousi Sultana, executive vice-president and public relations in-charge, could not be reached by mobile telephone despite several attempts by the Dhaka Tribune to contact them.
