Three defaulters cruising on Janata loans

Highlights:

• Janata Bank's total default loans amount to Tk13,509 crore
• AnonTex Group accounts for Tk6,629 crore of loans
• Crescent Group defaulted Tk1,896 crore
• Remix Group owes Tk1,078 crore to Janata

State-owned Janata Bank has been reeling under financial stress, mainly because of three business groups that account for almost half of the bank's total default loans. 

As of June this year, the bank has default loans amounting to Tk13,509 crore, while the three groups – AnonTex Group, Crescent Group and Rimex Footwear – defaulted on 48.56% or Tk6,629 crore of the amount, according to the bank's credit risk assessment and resolution report sent to the Bangladesh Bank recently.

Janata Bank provided loans amounting to Tk6,607 crore to 22 business entities of AnonTex Group, the bank's biggest defaulter, breaching the single borrower exposure limit. 

Of the total amount, the group's two entities took out Tk255.48 crore from Janata Bank's local office branch in Motijheel and have defaulted on the entire amount. Besides, Tk3,398 crore out of Tk6,352 crore that Janata extended to its 20 other organisations have been defaulted.

AnonTex Group now accounts for 26.77% of Janata's total default loans, according to the report. 

Under the special loan rescheduling facility, Janata Bank rescheduled loans of the group's seven entities with a 2% down payment over the last two years. 

The organisations' loans were regular over the last one year even though they did not repay even a single penny to the bank. 

Later, the Bangladesh Bank cancelled the loan rescheduling facility offered to the seven business entities, on allegations of irregularities and frauds in giving the loans to them. 

The Anti-Corruption Commission (ACC) is now investigating a Tk5,000 crore loan fraud allegedly by AnonTex Group.

When contacted, Younus Badal, chairman and managing director at AnonTex Group, told The Business Standard, "I will not make any comments on our group's default loans. We have no activities with Janata Bank."

Crescent Group, the second-largest defaulter of Janata, defaulted on loans of Tk1,896 crore out of Tk2007 crore taken from Janata Bank, which is 13.89% of the bank's total default loans. 

The ACC is also investigating an alleged Tk1,745 crore loan scam by Crescent Group.  

On 30 January, Crescent Group Chairman MA Kader was arrested in connection with the loan swindle after the ACC had filed five cases against him and 19 others. The cases are still sub judice. 

Remix Group, Janata's third-largest defaulter, is owned by Abdul Aziz, also the owner of Jaaz Multimedia and younger brother of the Crescent Group chairman.

The group defaulted on Tk1,078 crore out of Tk1,133 crore taken from Janata Bank. 

Janata Bank has decided to put Jaaz Multimedia up for auction to retrieve their default loans. 

As per the memorandum of understanding signed by four state-owned banks with the Bangladesh Bank, Janata Bank could recover only Tk7.4 crore against the target of Tk800 crore from top 20 defaulters in January-June this year. 

Four years ago, the bank's financial health was good as reflected in all indicators. But its condition started to deteriorate with default loans rising by three times to Tk17,224 crore in 2018 from only Tk4,116 crore in 2016.

As of December 2020, Janata's default loans amounted to Tk13,622, which was almost 25% of its total disbursed loans.

Despite repeated attempts over the phone, Janata Bank's managing director could not be contacted for comments.

In the credit risk assessment and resolution report, to minimise risk of classified loans, the bank has come up with several proposals, such as going for negotiations with borrowers to recover classified loans if no cases are filed against them or suing them if needed.

Janata Bank is also facing big trouble in keeping provisions against huge amounts of default and bad loans. The bank managed to provision only Tk3,084 crore against Tk6,900 crore. The provision shortfall now stands at Tk3,818.

When contacted, AB Mirza Azizul Islam, economist and financial adviser to a caretaker government, told TBS that Janata should auction off mortgaged properties of defaulter companies that have not been repaying loans for a long time.

The bank officials who were involved in loan scams have to be brought to book too, he added.