The state-owned Sonali Bank has written off the loans embezzled by the Hallmark Group, as there is no hope of getting the money back.
The executive committee of Sonali Bank recently approved a proposal to write off a Tk2,086 crore loan in favour of 23 clients, including the scam-hit Hallmark.
Apart from Hallmark, the committee has also written off the bad loans of 13 other clients from various branches of the bank.
Of the loan amount, around Tk1,700 crore has been written off against the loans of the Hallmark Group from the Ruposhi Bangla Hotel branch, and 13 other clients from other branches.
The approval came at the 35th EC meeting of Sonali Bank. The board made the decision at a time when the bank is running with a capital shortfall of Tk394 crore.
Expressing concern over the large loan write off, Bangladesh Bank has undertaken a move to check whether the required provisions were followed before writing off the loans.
“Sonali Bank has written off the loans of the Hallmark Group, as the bank has little hope of recovering the loans,” said Bangladesh Bank Executive Director Mohammad Naushad Ali Chowdhury.
He said the bank can write off any loan after the board approval following the required provisions.
“We've instructed the department concerned to check whether proper procedures were followed in the case of the write-off of the loans against the Hallmark Group,” he added.
The BB investigation had earlier found that Sonali Bank's Ruposhi Bangla Hotel branch lent the Hallmark Group and five other companies Tk3,547 crore between 2010 and 2012, using fake documents.
Of the Tk3,547 crore, the Hallmark Group alone swindled Tk2,686.14 crore.
Later on, Sonali Bank filed cases against Hallmark Group as it failed to get buyers for the mortgaged assets of the company.
The bank fell into capital shortfall, while the large loans, taken through irregularities, went into default. Then, the government injected around Tk2,000 crore in 2013, and Tk710 crore in 2014, for the survival of the bank.
However, despite large loans being written off, the bank showed high profits in 2014. In fact, the bank bagged an operating profit of Tk855 crore and net profit of Tk492 crore.
The actual profits of the bank could be ascertained just after the visit of the Bangladesh Bank investigation team, said a BB review report on Sonali Bank.
The bank also showed that capital shortfall was reduced to Tk394 crore last year, after the recapitalisation of large amounts by the government, from Tk895 crore in 2013, but this figure might be higher than the bank's claim after the investigation was carried out by the central bank, said the BB report.
Sonali Bank has written off loans worth Tk2,946 crore during the last year and rescheduled loans of total Tk2,756 crore in 2013 and 2014.
The bank's default loan rate came down to 28.54% last December due to the rescheduling and writing off of large loans. It could have even crossed 40% had there been no rescheduling and writing off, said Bangladesh Bank in its review report.
The position of the state-owned bank slipped to five from its previous marginal level of four, in its CAMELS rating during last year as the bank's financial health was considered unsatisfactory.
