During 2010-2012 BASIC Bank and Hall-Mark were engulfed in scams

The default loan of state-owned Sonali Bank has risen over 50% following the Hall-Mark Group loan scam, said the bank Managing Director Obayed Ullah Al Masud.

Masud said this while exchanging views with the reporters at his office on Wednesday. The deputy managing directors and general managers of the bank were also present on the occasion.

“The defaulter does not have the amount of collateral needed to show against the loan sanctioned. In reality, there has not been any disbursement of loan, rather it was a complete theft which led the default loan to nearly 50%.”

When it comes to Sonali Bank, the name of Hall-Mark Group surfaces automatically, Obayed Ullah said, adding that from 2010 to 2012 the banking and housing sectors, plus stock market went through a situation like ‘Tsunami’ while BASIC Bank and Hall-Mark Group were engulfed in scams.

At present, Sonali Bank deposit stands at Tk100,000 crore. Of which, Tk38,000 crore has been disbursed as loan. Among the disbursements, a Tk10,000-crore loan has become default while Tk7,000 crore classified and Tk2,000 crore stuck in a rescheduling writ.

“Of the total loan, Tk19,000 crore are default amount. Therefore, it is high time we got to bring down the amount of default loans,” said the seasoned banker.

Among the 1,210 Sonali Bank branches, a total of 20 are vulnerable with 84% default loans while five others with 54% default loans.

Citing the reasons behind default loans, he said, a number of loan sharks have appropriated the amount of money. In fact, big loanees have big amount in their hand in some big branches.

The bank has taken up measures like waiving interest, rescheduling and legal action to realise the default loans.

The central bank investigation found that the Ruposhi Bangla Hotel branch of Sonali Bank gave Hall-Mark and five other companies Tk3,547 crore on fake documents.

The Bangladesh Bank (BB) had no proper system in place for monitoring foreign exchange inflow and its utilisation before the sudden hike in price of US dollar in April last, a senior central banker admitted.

"Now we are monitoring everything. There was no effective monitoring then," BB executive director for Foreign Exchange Policy Department Ahmed Jamal told the FE.

People learn from mistakes, he said.

In April last, price of US dollar went up to Tk 84 from usual Tk 79 all on a sudden prompting the central bank to intervene.

The government also expressed concern over the unusual price hike of the greenback.

Following this, the central bank met treasury heads of 20 banks and asked them to submit forex transaction details for the entire month of April.

Mr Jamal told the FE Tuesday there was a mismatch in dollar inflow and utilisation which had triggered the hike in its value against Bangladesh Taka.

"But we did not find any foul play behind the dollar price hike," he said replying to a question.     

Asked what caused the dollar price hike, Mr Jamal said, there was a liquidity shortfall at that time. "Now it is gone."

He also said foreign banks do not bring in any remittance to the country but buy US dollars from the local market whenever they need. "We asked them to contribute to remittance inflow."

Asked if any measure was taken to stop the recurrence of such incident, Mr Jamal said everything is now being monitored. "We check the possible L/C payment for next one month and the arrangement to meet the dollar needs."

BB deputy governor Abu Hena Mohd Razee Hassan told the FE that foreign banks do not buy dollars from abroad; rather they purchase it from local market as a result of which shortfall is created sometimes.

"We will have to take some policy measures to engage all banks in bringing remittance," he said.

Mr Hassan had earlier told the FE that availability of $14 million to $15 million in cash is good enough to meet any need. But in April last, cash dollars worth $20 million were available.

He had said that a probe body would be formed to investigate the incident to stop recurrence of such shortfall and consequent price hike.

But, officials said, until now no formal probe body was formed to look into the matter.

news:financial express/8-jun-2017

The government is going to grant Tk 10 billion to the scam-hit BASIC Bank to meet its capital shortfall, once more.

Besides, officials said, five state-owned banks (SoBs), one private bank, a specialised financial entity and restructured Grameen Bank (GB) together will also get another dollop of Tk 10 billion under different heads.

The ministry of finance has sent a proposal in this regard to the finance minister for approval, at a time when there has been a flurry of debate over repeated giving of taxpayers' money for so-called recapitalisation to the banks.

According to the proposal, the funds are set to be handed out to five state-run banks, private-bank IFIC, House Building Finance Corporation and Grameen Bank, the sources said.

The money will be made available from a fund of Tk 20 billion that has been earmarked in the budget for 2016-17 for recapitalisation.

And from this spare money, the scam-ridden BASIC Bank is getting the highest amount as it stood hollowed for fraudulent lending that led to its management shakeup.

Some Tk 10 billion, Tk 3.0 billion, Tk 1.0 billion, over Tk 1.64 billion and Tk 1.0 billion will go into the coffers of BASIC, Sonali Bank, Rupali Bank, Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank (RAKUB) respectively from the budgetary fund, according to the finance ministry data.

Besides, Tk 1.85 billion will be provided to the IFIC as subscription fee for rights share. Also, Tk 1.50 billion and Tk 2.2 million will be provided to the house-building finance corporation and Grameen Bank respectively, according to government share ratio.

"We have given allotment from the recapitalisation fund to the SoBs and other agencies. The highest amount has been given to the BASIC Bank," said an official concerned.

Earlier, Bank and Financial Institutions Division (BFID) had sent the proposal for funding the state-run banks and Grameen Bank. In this connection, an inter-ministerial meeting was held on May 02 last.

The meeting recommended providing the proposed funds to the banks from the budget for 2016-17 for recapitalisation.

The government has kept aside Tk 20 billion as a head of recapitalisation of banks and others for the current fiscal year.

As of last March, Sonali Bank had a capital shortfall of Tk 25.58 billion, Rupali Bank Tk 6.38 billion, BASIC Bank Tk 29.62 billion, Bangladesh Krishi Bank Tk 72.53 billion and Rajshahi Krishi Unnayan Bank Tk 7.79 billion.  

The funds will be fed to banks in the forms of different trades, said a source with the direct knowledge on the matter.

"We have sought an allocation of Tk 26 billion from government for BASIC to reduce its capital shortfall. A huge amount of funds is an urgent need for the bank," Chairman of BASIC Bank Limited Alauddin A. Majid told the FE.

"We are facing trouble to operate the bank's business now. At present, BASIC bank is running its Letter of Credit (LC) business with the help of a third bank," he said.

"We have got the proposal sent by state-owned banks, seeking funds to meet their capital shortfall from the current budget," a senior official of the banking division said.

State-run Sonali Bank, Rupali Bank and BASIC Bank have also proposed issuing bond for replenishing their emaciated capital, he added.

KUALA LUMPUR: Malaysia's central bank Bank Negara said Wednesday that international reserves amounted to 433.3 billion ringgit (98 billion U.S. dollars) as of May 31.

The number was 0.72 percent higher compared with its last report of 97.3 billion dollars on May 15, reports Xinhua.

The international reserves consisted of 91.6 billion dollars in foreign currency reserves, 800 million dollars in International Monetary Fund (IMF) Reserves Position, 1.1 billion dollars in Special Drawing Rights (SDRs), 1.6 billion dollars in gold and 2.9 billion dollars in other reserves assets.

Its reserves position is sufficient to finance 8.1 months of retained imports and is 1.1 times the short-term external debt.