Illegal Online transfer of Tk 120.37cr by Agrabad MBL branch

The Agrabad Branch of Mercantile Bank Ltd. (MBL) in Chittagong city has approved a loan of Tk 120.37 crore to a director of the bank in the name of his company breaking the rules of the central bank, officials said.
A special inspection team of Bangladesh Bank (BB) found the irregularity in a recent spot visits to the branch and reported this ‘flagrant violation’ of the banking rules to the central bank authority.
The fund was transferred directly through On-line clearing-adjusting account (A/C No. 90135250006) of the SA Oil Refinery Ltd, owned by Md Shahab
Uddin Alam (S Alam) who is also one of the directors of the Bank.
The BB inspection team found that the officials of the branch used the practice of debiting money from the account and later credited it (Tk 120.37 crore) to the Special Notice Deposit Account (SND-0104-13100000400) of SA Oil Refinery in 54 transactions between March 03, 2012 and October 02 of 2012.
According to the Bangladesh Bank (BB) report, the authorities of the Mercantile Bank have allowed the director to avail of the ‘illegal facility’ and the money was wrongfully debited without presenting any instrument in the On-line clearing house for appropriate reporting of transactions.
They have used the On-line clearing-adjusting account as the tool of a fraudulent practice and created fictitious assets to show the adjustment in transaction in ‘Statement of Affairs.’
In other word, the account has been used in such a manner that it seems to be a permissible loan account of the party.
“The bank has provided the illegal facility to an affiliated business firm of its own director and this is equivalent to a criminal offense,” said the BB team commenting on the report adding, such fraudulent practice poses big threat to the depositors money in a bank.
On the other hand, debiting through on-line clearing-adjusting account by way of giving Temporary Overdraft (TOD) facility is an absolute violation of the clause-27 of the Bank Company Act 1991 and BRPD circular 07/99.
“The Agrabad branch has also concealed producing this loan to have been given to one to its director in its report to CIB of the central bank. The entire loan was a product of illicit connivance between the branch manager and the director of the bank,” the report added.
Moreover, it has brought no financial benefits to the bank while bringing risk to money of the depositors of the bank.

Source: The New Nation

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