Dhaka Bank made gross irregularities in providing loans to some large commodity importers which helped them hoard products, control import and finally contribute to price hike, a central bank inspection report said. The Khatungonj Branch of the bank disbursed loan amount beyond single exposure limit to Ilias Brothers, Abul Khair Group and PHP Group which directly helped the players put control on essential commodities, the central bank report added.
It also violated central bank guideline as Dhaka Bank provided loan by allowing PHP group to 180 days instead of 90 days adjustment period for import of essential commodities.
Bangladesh Bank last month conducted the inspection to 15 branches of Dhaka Bank on a random sampling basis based on the bank’s June, 2010 balance.
The inspection team also identified banks irregularities in opening accounts, managing deeds and documents and paying money by cheque beyond dates.
Dhaka Bank Head of Credit SASA Musabbir said the bank has not yet receive any formal report or complaint in this regard from the central bank. “We can not comment on that allegation right this moment as we have not yet receive any formal letter from the central bank,” Musabbir added.
However according to the report the bank branch showed many others flexibilities to commodity importers including provide loan without taking mortgage, and provide loan to sister concerns violating rules. 
The bank further violated guideline as its Khatungonj branch did not collect 5 percent advance income tax from the importers as commission on opening letter of credits.
The branch management also did not take permission from head office to open LC in favour of Abul Khair Group which is also the clear violation of central bank guideline. Meanwhile Dhaka Bank has no investment policy yet despite the bank established over 10 years. The central bank asked Dhaka Bank to immediately implement an investment policy. During the inspection, the central bank identified Tk 65.78 crore provision shortfall and instructed to adjust it by June 2011. The inspection team also identified the bank combined deposit shortfall of Tk 52.35 crore which also the team instructed to fulfil as early as possible.
“The bank clearly violated many of the central bank guidelines in providing loan to essential product importers which help opportunity to price hike artificially, a high official of the Bangladesh Bank Banking Inspection Department said.
The central bank instructed Dhaka Bank to immediately adjust the single exposure limit to within limit and clarify other breaching.
When asked K. M. Abdul Wadood, General Manager, Banking Rules and Provision Department of Bangladesh bank said generally central bank at first stage warn those banks who violated guidelines, secondly the bank star non cooperation with those banks who remained unruly and thirdly central bank do not give any permission to open new branch.
He said in case of Dhaka Bank the central would analyze all the situation and will warn it against their faults. When asked bank Khatungonj Branch Manager Mozammel Haq said the branch may have some mistake which would be immediately adjusted.
He said the central bank inspection team zoomed each small mistakes of the branch for which the overall tally become big but the branch actual mistake are not big as central bank blamed.“We will soon adjust those mistakes and will inform central bank about our initiatives” Mozammel added.

Source: The Independent /Bangladesh/Jun, 02, 2011