S Alam drains Janata branch dry

Business conglomerate S Alam Group, under the protection of the recently ousted Awami League regime, had taken out Tk 10,449.45 crore loans from the state run Janata Bank as of June this year violating banking rules.
Of the amount, Tk 8,216 crore loans were taken from a single branch, the Sadharan Bima Bhaban Corporate Branch in Chattogram, as of July last year. As much as Tk 5,139 crore of the amount was sanctioned even after the single borrower exposure limit for the branch was exceeded, shows a document of Janata Bank.
The Chattogram-based group alone has taken 90 percent of all loans disbursed by the branch, according to the document. However, it did not mention the tenure of disbursement.
Besides, the date for classification of Tk 2,871 crore of the total loans disbursed from the branch has already expired, the document shows.
The amount of Tk 10,449.45 crore is 451.57 percent of the state-run bank’s total paid up capital, according to the Janata document.
As per law, a bank is not allowed to lend more than 25 percent of its paid-up capital to a single client. At the end of June this year, Janata’s paid-up capital stood at Tk 2,314 crore.
S Alam Group took the loans for its six companies, which is 10.7 percent of Janata’s total disbursed loans of Tk 98,000 crore.
The bank’s document shows that about 49 percent of its outstanding loans have become defaulted, putting its financial health at risk.
Amid such a situation, the bank on June 25 rescheduled the Tk 1,844.60 crore loans taken by the six companies of S Alam Group for four years, breaching rules.
The companies were given the rescheduling facility although it had outstanding loans of Tk 8,895.91 crore, which was 419.68 percent of Janata’s total paid-up capital.
Reviewing the document of Janata Bank, The Daily Star found that the amount of rescheduled loan of S Alam Refined Sugar Industries was Tk 1,038.75 crore, while the figure was Tk 1,186.43 crore for S Alam Trading Company Ltd, Tk 696.42 crore for S Alam Vegetable Oil Ltd, Tk 221.13 crore for Global Trading Corporation and Tk 1,229.55 crore for S Alam Cold Rolled Steels Ltd.
The Janata document did not mention the name of the other S Alam Group company and the loan amount disbursed to it.
But the companies did not repay the loans. As a result, the loans became long-term debt due to rescheduling, the document said.
As per banking rules, a fresh loan rescheduling facility can be granted for a client only if it is within the permitted limits.
In this case, the rescheduled liabilities of five S Alam Group companies was TK 4,372.28 crore against the limit of Tk 3,250 crore. That is why the group should not have been given the fresh rescheduling facility as per the law.
Despite that, Janata rescheduled Tk 1,844.60 crore loans on June 25 for four years with special permission from Bangladesh Bank.
On July 28, the central bank gave a no-objection certificate for rescheduling the loans although the amount violated Janata’s single borrower exposure limit.
However, in its no-objection certificate, the central bank set some conditions, including the loan amount cannot be increased anymore, and the loan amount must be brought within the permitted limits by December 31, 2025.
S Alam Group and another business entity Nabil Group have taken out about Tk 50,000 crores from Islami Bank Bangladesh since S Alam took control over the ownership of the Shariah-based bank in 2017, according to media reports.
The Daily Star could not reach Saiful Alam, chairman of S Alam Group, for comments as his phone was switched off.
This paper also could not have comments from Md Abdul Jabbar, managing director and chief executive officer of Janata Bank, as he did not respond to calls.