Bank News
Pubali Bank manager goes missing with more than Tk 2.5 crore in Chandpur
Shrikanta Nandi, manager of Natun Bazar branch in Chandpur town of Pubali Bank PLC, has gone missing with more than Tk 2.5 crores.
Shrikanta Nandi, 40, is son of Nani Gopal Nandi and a resident of Ghagra village in Kachua upazila.
The new manager of the bank and a customer filed two General Diaries (GD) separately at Chandpur Sadar Model Police Station in this regard.
Narsingdi UP member shot dead in broad daylight
According to the sources, Shrikanta Nandi swindled Tk 2. 51 crore from the customers.
On Monday (April 15) afternoon, the new manager of the branch Humayun Kabir and Chandpur Model Police Station Sub-Inspector (Investigative Officer) Nazrul Islam, came to know the matter after talking to customers.
Akbar Hossain Liton, one of the victims, said Shrikant Nandi wanted to borrow money from him before Eid. A few days later, when he went to the bank for a pay order, he took Tk 1.76 crore from him.
"But he disappeared without depositing the money in the bank," Liton claimed.
On April 13, Liton lodged a GD at Chandpur Model Police Station.
The accused bank manager also swindled Tk 75 lakh from another customer named Maruf of the Asrafpur area offering more profit.
Padma Bridge: Record Tk 4.90 crore toll collected in 24 hrs
The matter is being investigated through the higher authority, said the current bank manager, adding that there is no problem with internal customers' transactions.
Chandpur Model Police Station Sub-Inspector Nazrul Islam said that they are investigating the issue following the GDs.
"We will take legal action if there is any complaint regarding the transaction," he added.
Read more: BRAC Bank promotes three senior officials to SEVP
Bank default loans surge to Tk1.31 lakh crore: BB
The defaulted loans in the banking sector climbed by about Tk10, 954 crore to Tk1,31, 621 crore in the January-March quarter.
According to Bangladesh Bank (BB) the defaulted loans increased by 9 percent from three months ago and 16 percent from a year earlier.
Despite different initiative of the central bank, defaulted loans is on a rising trend, which is becoming challenging and a headache, the BB Governor said recently in a conference Association of Bankers Bangladesh (ABB).
In comparison, the default loan figure stood at Tk1,20,656 crore in December 2022.
Also Read: Market-based interest rate, unified exchange rate from July: Bangladesh Bank
The defaulted loan volume surged in post Covid-19 period while the businesses abstained from repaying loan installments citing poor business.
During the pandemic the central bank announced a moratorium on regular repayment of loans that helped a large number of borrowers from becoming defaulters.
After withdrawal of the moratorium facility, the defaulted loan volume increased by over Tk 1.20 lakh crore in December last year.
Former governor of BB Dr. Salehuddin Ahmed told UNB that a group of businesses is becoming defaulters willfully and the central bank has to be strict with such people.
Also Read: IMF-Bangladesh Bank meeting prioritizes unified exchange rate and competitive lending rate
He said for lack of good governance, some organized groups have taken more money as loans than their ability, which is a reason behind surge in defaulted loans.
17 banks facing severe liquidity crunch after violating lending limits
Despite Bangladesh Bank’s initiatives to promote good governance in the banking sector, 17 banks have recently violated their loan disbursement limits, and are now embroiled in a severe liquidity crisis.
Having been over-aggressive in providing loans, they are now unable to recover the loans and attract new deposits as desired, according to a latest internal report of the central bank seen by UNB.
The banks should not sanction any new loans until they restore the ratio of their loans to deposits in accordance with limits set by Bangladesh Bank, which regulates the financial sector.
Also Read: Banks' assets will decrease by 40% if international reporting standards followed: FRC Chairman
Conventional banks can provide loans of up to Tk 87 for every Tk 100 in deposits, while Shariah-based banks can give loans of up to Tk 92 against every Tk 100 in deposits, according to the rules of Bangladesh Bank. This is called Advance Deposit Ratio (ADR) or loan-deposit ratio limit in banking terms.
According to the central bank report covering January 1-26 of this year, 17 banks violated the limits set for them on lending order due to lack of discipline. As a result, the concerned banks have been plunged into an extreme liquidity crisis, making it difficult for them to sanction new loans. Some of them are even unable to pay depositors in some cases.
Experts fear that the existing situation has created additional risks for depositors. According to them, irregularities, corruption and ‘ghost loans’ - loans to firms that turn out to be non-existent -are behind the collapse of the banking system’s loan disbursement process.
Also Read: Prime Bank receives $50m from IFC to support trade, forex liquidity needs in Bangladesh
“In the banking sector, there have been allegations of giving large amounts of ghost loans in recent times. If this continues, the sector will be at risk,” said Dr ABM Mirza Azizul Islam, economist and adviser on finance to the last caretaker government.
Mirza Azizul told UNB, "Lending beyond the limit against deposits disrupts the credit system."
Besides, the debt collection situation of the banks is not satisfactory now. In such a situation, if the non-performing loans increase further with additional loans, then there is a danger for the bank and its depositors will suffer, he added.
He suggested the intervention of the central bank in these banks immediately.
Also Read: BB signs deal with 32 banks to accelerate disbursement of green fund
According to the Bangladesh Bank report, the ADR of National Bank Ltd stood at 98.23 while that of AB Bank was 96.64 in its conventional stream and 103.45 in its Shariah stream.
State-owned Basic Bank’s ADR stood at 91.17, One Bank’s was 89, and multinational National Bank of Pakistan’s was 87.52. Widespread irregularities and corruption have already been reported in these banks.
Apart from this, Community Bank's ADR was 88.28, NRB Bank’s at 88.05 and IFIC Bank's ADR was 87.48, the report states.
Shariah-based Exim Bank's ADR stood at 100.28, Standard Bank's at 96.28, Premier Bank's Islamic Window 155.09 and Bangladesh Commerce Bank's Islamic Window's ADR was 133.26.
Read More: Banks’ transaction time from 9:30 am to 2:30 pm for Ramadan
Apart from this, the ADRs of five other Shariah-based banks ranged between 93.01 to 104.54.
A managing director (MD) of a private bank told UNB that the lending limit has undoubtedly been set by Bangladesh Bank based on adequate research and global best practices. No bank should have to cross the limit.
“These violations are creating risk in the banking sector. Depositors in particular will be at greater risk. Already some banks and non-bank financial institutions are not able to return money to depositors,” he said, maintaining anonymity.
The central bank has also extended the period of ADR adjustment five times to allow the banks to bring their lending practices in line with the limits.
Read More: BB disburses Tk 4000 crore as liquidity support to 5 Islami banks
However, many banks could not coordinate this. In such a situation, Bangladesh Bank even increased the required ADR to improve the overall liquidity situation of the banking sector to maintain the pace in credit flow to the private sector.
The executive director and spokesperson of Bangladesh Bank, Md Mezbaul Haque, told UNB that although some banks may at times find themselves in violation of the ADR set for them, the central bank would under normal circumstances give them time to get themselves back within the limit.
“But if they stay outside the limit for long, then they must be warned and action would be taken accordingly,” Mezbaul said.
Read More: One of Silicon Valley's top banks fails; assets are seized