Agrani Bank gave Tk 136cr loan to traceless co: BB

Posted by BankInfo on Wed, Feb 24 2016 12:58 pm

Bangladesh Bank in a recent inspection unearthed that Agrani Bank disbursed Tk 136.83 crore in loans to a Chittagong-based non-existent company named M/S Zaynab Trading Co without taking adequate mortgage from it. The state-run bank disbursed Tk 24.76 crore as cash credit (hypothecation) and Tk 112.07 crore to settle liabilities of letters of credit in favour of Zaynab Trading. The Asadganj branch in Chittagong of the bank processed the sanctioning and disbursement of the loans. The BB investigation team conducted the inspection between January 10 and January 13 of this year. The central bank’s inspection report said Agrani Bank’s managing director and chief executive officer Syed Abdul Hamid was directly involved in the financial irregularities. The inspection team recommended taking stern action against the bank’s managing director due to his involvement in the scam. The BB report said the office of Zaynab Trading was supposed to be located at Khatunganj in Chittagong, but the central bank team did not find the company’s office on a spot visit. According to the BB report, Hamid also took a decision to shift the Asadganj branch of the bank to a building owned by the managing director of Zaynab Trading, violating rules and regulations. No bank managing director is allowed to take decision on relocation of a branch of his/her bank in line with the BB circular as such type of decision must be taken by the board of directors with approval from the central bank. Abdullah Mahmud is managing director of Zaynab Trading and his wife Raiyan Peare Nahas is chairman of the company. The bank also sanctioned loans amounting to Tk 81 lakh without imposing any interest to Abdullah by showing as advanced rent payment for the branch. The new location of the bank branch is supposed to be at Khatuganj in the Chittagong city but no infrastructure of the company exists there, the BB report said. The BB report said the board of Agrani Bank had sanctioned loans amounting to Tk 25 crore as CC (hypo) and revolving LC limit of Tk 40 crore on February 8, 2014 in favour of Zaynab Trading on the basis of a number of conditions. The company, however, failed to implement the conditions but the managing director of the bank renewed the LC limit and the CC (hypo) loans for one year more on August 20, 2015. According to the Agrani Bank credit risk guidelines, the bank’s managing director is allowed to sanction or renew maximum amount of Tk 1 crore in loan. But, Hamid violated the bank’s guidelines renewing the huge amount of loan, the BB report said. Zaynab Trading opened deferred LCs worth $47.36 lakh on August 23, 2015 to import Canadian whole yellow peas from Canada crossing the LC limit renewed by the bank’s managing director. After three days, the company increased the LC worth to $93.84 lakh to import peas, the BB report said. The BB inspection team asked the bank’s branch to show the company’s depot of the imported peas, but the officials of the bank failed to do it. Before opening the LCs, Zaynab Trading opened another LCs worth $37 lakh on April 23, 2015 to import peas from Canada. But, the company did not make payment against the LCs to the bank in due time, the BB report said. The bank took an initiative to receive foreign loans amounting to $39.09 lakh in favour of Zanab Trading from Dubai-based Mashreq Bank to adjust the worth of the LCs. The report said that the bank should create demand or term loan to adjust the worth of the LCs. Agrani Bank gave bank guarantee to the loan violating the rules and regulations as any bank has to take prior approval from the BB to give bank guarantee to a foreign loan, the BB report said. The bank informed the BB team that the company gave mortgage of 185.50 decimal of land against the loans. The inspection team, however, found that the original mortgage amount was only 33.59 decimal of land. Besides, the ownership of the land was flawed. The inspection report said that S and M Trading was an associate company of Zaynab Trading. The owner of S and M Trading is Ruhia Khanam who is mother of Abdullah, managing director of Zaynab Trading. S and M Trading have an overdue loan of Tk 112.07 crore with Bank Asia and Al-Arafah Islami Bank. Of the loan, Tk 7.64 crore entered into the defaulted zone. Abdullah gave the guarantee against the loans. The defaulted guarantors are not allowed to take fresh loan from the banks in accordance with the BB’s policy, but Agrani Bank gave loans to Abdullah, the BB report said. Moreover, Zanyb Trading has recently proposed taking a fresh loan amounting to Tk 185 crore to Agrani Bank. Agrani Bank managing director Zaid Bakht told New Age on Tuesday that the bank had already suspended two officials of the Asadganj branch due to their alleged involvement in the scam. The board also directed to file criminal cases against Zaynab Trading and officials involved of the bank, he said. Asked whether the board would take any measure against Hamid, he said that the bank had started an investigation into the matter. Despite repeated attempts, Hamid could be reached over mobile phone.sthash.

News:New Age/24-Feb-2016
Posted in Banking, News