• Monday, Oct 18, 2021
  • Last Update : 04:59 pm

Janata Bank plagued by bad loans, capital shortfall, huge losses

  • Published at 10:43 pm October 14th, 2018
web-janata-bank
Collected from Janata Bank's Facebook page

There is no such visible progress made by Janata about the situation 

Janata Bank is yet to undertake any effective measures to come out from under huge bad loans, mainly to a number of businesses, including Anon Tex and Crescent Group, defying central bank regulations.

The state-owned commercial bank lent above Tk 10,000 crore to Anon Tex and Crescent Group, a Bangladesh Bank(BB) recent report unveiled, saying Janata did not comply with the central bank’s single borrower exposure  limit criteria.

Once considered a good performer among public sector banks, Janata is now going through troubled times, former BB Governor Salehuddin Ahmed  said, adding there is no visible action plan of the bank for a turnaround.

Janata faced a net shortfall in capital to the tune of Tk 2,200 crore in June.  Janata's downfall began in January this year. It incurred a huge loss of Tk 1,600 crore in the first six months of this year alone. In July and August, Janata Bank deposits also went down by Tk 2,612 crore.

In a recent meeting with the four SCBs, the BB asked them to fix a target for recovering bad loans as a whole, and particularly from top 20 defaulting companies. 

However, there is no such visible progress made by Janata, although its Managing Director Abdus Salam Azad said they had already taken major steps to lower the extent of bad loans.

According Bangladesh Bank data, as of June 30, default loans of Janata Bank stood at Tk9,879 crore, which is 22% of its total loans. In December last year, it was 14.10% or Tk5,345 crore. 

The bank has given loans of about Tk5,500 crore to Anon Tex, which is a clear violation of Bank Company Act 1991 as it provided 25% of the state-owned bank's capital base. According to the act, single borrower exposure limit is 10%. 

“Non Performing Loans (NPL) have increased sharply due to massive lending to Crescent Leather, and the negative growth in earnings is caused by the provisioning of bad loans,” Janata Bank Managing Director Md. Abdus Salam Azad told the Dhaka Tribune. 

The Janata Bank has given loans of about Tk5,000 crore to Crescent Group. The group took away Tk460 crore as incentives using fake export documents.   

Overall, the banking sector and Janata Bank are going through bad times, said Salam.

“We have decided to bring down the default loans and to recover at least Tk2000 crore by this year. We have already asked the branches to take necessary steps. We are also holding meetings with the defaulters to devise ways to recover the loans,” said Salam.

Talking on the Anon Tex loan recovery, Salam said the company is paying installments regularly and we have already recovered Tk300 crore as of September this year. 

Meanwhile, bank management is going to file a case against Crescent Leather with Artha Rin Adalat (Money Loan Court) to recover the loans. 

The bank recently hired Barrister M Amir-ul Islam to face the loan default legal battles in the courts, said Salam.    

Salehuddin Ahmed cited lack of good governance and widespread corruption as major reasons for the current dire situation prevailing at Janata and other public sector banks.

“The politically appointed bank directors often influence bank officials in the loan sanctioning process, resulting in default loans. In addition, weaknesses, corruption, and lack of experience among a section of bankers, helps create the situation,” he added.

The former central banker said, until and unless the political appointment of directors to the boards of state-owned banks is not stopped, the fate of other public sector banks would not be any different from that of Janata.

75
Facebook 69
blogger sharing button blogger
buffer sharing button buffer
diaspora sharing button diaspora
digg sharing button digg
douban sharing button douban
email sharing button email
evernote sharing button evernote
flipboard sharing button flipboard
pocket sharing button getpocket
github sharing button github
gmail sharing button gmail
googlebookmarks sharing button googlebookmarks
hackernews sharing button hackernews
instapaper sharing button instapaper
line sharing button line
linkedin sharing button linkedin
livejournal sharing button livejournal
mailru sharing button mailru
medium sharing button medium
meneame sharing button meneame
messenger sharing button messenger
odnoklassniki sharing button odnoklassniki
pinterest sharing button pinterest
print sharing button print
qzone sharing button qzone
reddit sharing button reddit
refind sharing button refind
renren sharing button renren
skype sharing button skype
snapchat sharing button snapchat
surfingbird sharing button surfingbird
telegram sharing button telegram
tumblr sharing button tumblr
twitter sharing button twitter
vk sharing button vk
wechat sharing button wechat
weibo sharing button weibo
whatsapp sharing button whatsapp
wordpress sharing button wordpress
xing sharing button xing
yahoomail sharing button yahoomail