Rajshahi Krishi Unnayan Bank (RAKUB) is facing losses of Tk 2.23 crore allegedly due to a host of corrupt officials granting loans against fake documents.

The financial irregularities surfaced during an audit inspection by the Office of the Comptroller and Auditor General (OCAG) in 2010 at the bank's zonal office in Gaibandha and its branches.

Between 1997 and 2010, a number of officials at the branches sanctioned loans which violated Bangladesh Bank's instructions.

And, thanks to the bank's lax internal control and auditing, the discrepancies remained undetected.

According to the watchdog, the RAKUB's main office in Rajshahi lent Tk 1.10 crore in 2005 to one Rejaul Karim Sarker for setting up poultry and dairy farms and fisheries -- without actually verifying the venture's viability.

Furthermore, the officials of the bank were supposed to follow-through on the project's progress, ensuring that the first instalment of the loan was properly used. But the officials never did.

Now, the loan's recovery is in question -- as the project does not exist.

The branch has filed a case with Arthorin Adalat in 2009 in a bid to retrieve the money, but the OCAG deems it to be insufficient.

The report instead recommended that money be realised from the bank officials.

"As the court is dealing with the issue it is no more in our hands. We hope it will be settled soon," Md Mofazzal Husain, managing director of RAKUB, told The Daily Star.

He also said if the court gives a verdict in favour of the bank then they would be able to recoup the loan by selling the properties of the borrower.

A branch under the bank's Gaibandha zonal office lent Tk 36.85 lakh in 2006 -- against similar circumstances.

The bank did not check all the necessary papers, including the Credit Information Bureau report.

The date for repayment has expired in 2007 -- and the sum remains to be realised.

Furthermore, some other branches of the zonal office were involved in misappropriation, of Tk 19.53 lakh in total.

Four officials took the money through fake accounts, which did not have any files under the names.

The head office, however, has caught the officials, said the audit report.

Four officials of another branch under the zone, in connivance with supervisors, misappropriated Tk 56.92 lakh in the name of distributing loans under poverty eradication schemes.

According to the OCAG document, the sum was distributed among farmers in river erosion affected areas at a 6 percent interest rate.

The loans were never realised, with the borrowers remaining untraceable.

“It appeared that the four pocketed the sum and did not distribute it to the real borrowers,” said the OCAG document.

The RAKUB head office took the decision to retrieve the money from the four in 2008 -- but they were not suspended for their misdeeds.

“As the head office has kept their jobs intact, the possibility of repeats of such incidents remains, which will ultimately harm the financial institution from functioning like a bank,” said the document.

When asked if the bank will take any punitive measures against the people involved, he said: "We will have to look into the cases. It will take time, as the irregularities took place years ago."

"But, we will take all steps to recover the money,” added the RAKUB chief.

Husain further said that such incidents were rampant in the past.

"Now, the number is coming down. We have enhanced our monitoring and are regularly sitting with the field-level officers. Our target is to bring down such irregularities to as minimum a level as possible."

The findings were revealed in a report on December 23 of last year, which the audit watchdog prepared after digging out irregularities amounting to Tk 4,811 crore in spending of 22 ministries.