Serial defaulter asks for restructuring loans

The Daily Star  October 06, 2019

Serial defaulter asks for restructuring loans

BB should not contravene its own rules

The Daily Star 6 October 2019

The case of Mother Textile warrants everyone’s attention. This company has had outstanding loans of Tk 1,168 crore since 1993 and accounts for 27 percent of Rupali Bank’s defaulted loans as of June, 2019. The company in question has been given privileges in contravention to standard banking procedures more than once by Rupali Bank. The client has never repaid its loans, and yet, due to circumstances beyond our understanding, Rupali Bank management has topped up requests for more loans. Indeed, we are informed that the state-run bank went so far as to conceal the credit status of the delinquent borrower from 2009-2012–a gross violation! Then the bank showed a fictitious entry of an interest payment of Tk 111.29 crore from Mother Textile and this was unearthed by a BB investigation back in 2013.

Hence, when we are confronted with the news that Rupali Bank has requested BB that Mother Textile be allowed to pay monthly instalment of Tk one crore in 2020 and Tk 1.25 crore between 2021 and 2025, we are naturally dumfounded! The bad news doesn’t end there. The bank has further recommended that the defaulting company be allowed not to make any down payment to get this facility, which is in direct contravention to the BB rule that says a deposit of a minimum five percent of the outstanding amount is needed for any loan restructuring.

We would like to know why BB did not take action against state-owned Rupali Bank when it made a fictitious entry on behalf of this company in 2013. Why no action has been forthcoming against the bank for proposing measures that break BB rules. Precisely why the BB has done next to nothing when it comes to censuring the bank for repeatedly sanctioning loans to a client which has defaulted on loans for two and half decades, is not clear. No explanation is necessary to launch an investigation into wrongdoing by a bank because it is plain to see that we have, on paper, committed serious breach of established rules. The question now is: will it happen? Or, will this simply be another case of “turning a blind eye” while the banking sector is bled dry because the regulator is unwilling, or, unable to act.

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