Finds CAG inspection
Agrani Bank’s reckless lending practices have left the state-run bank in a loss of Tk 2,885 crore, auditors found recently.
The inspection, conducted by the Office of Comptroller and Auditor General (OCAG) at the bank’s head office from May to July, found that some of the funds might never be recouped.
The bank has a hole of Tk 416.85 crore in its books from its failure to recoup the amount it invested on ‘buyback shares’ of Unique Hotel and Resort Ltd, BEXTEX Ltd and GMG Airlines in 2010.
Agrani parted with Tk 300 crore at the time of purchase and the companies were supposed to repurchase the shares after one year at 20 percent interest.
The transaction, however, never took place, said the audit report. The shares’ value as of December 31, 2012 stood at Tk 271.34 crore.
So far, the three companies paid only Tk 7.29 crore of the interest amounts of Tk 124.14 crore, meaning a total of Tk 416.85 crore is pending, the audit report said.
Moreover, the bank could not adjust the outstanding amount by selling in the stockmarket as the shares were never transferred to Agrani.
“It is a serious irregularity and against the interests of the bank,” the OCAG said in the report.
GMG Airlines was shut down in March 2012, meaning the Tk 67 crore that Agrani spent in 2010 most definitely would not be realised, said the report.
The state-owned commercial bank also lost Tk 208.81 crore on its other proprietary trading activities: the market price of its stockmarket investment of Tk 905.48 crore came down to Tk 696.67 crore on December 31, 2012.
The bank is owed Tk 188.91 crore from BEXIMCO against the deferred letter of credit (LC) for Tk 244 crore approved in 2011. It accepted shares worth Tk 333 crore as collateral, whose value have now plummeted to Tk 57.98 crore.
The OCAG particularly unearthed major financial irregularities at the bank’s Lal Dighi East branch in Chittagong.
In 2010, the branch extended both deferred and cash LCs and LC without collateral upon approval from the managing director, an authority not enjoyed by the position.
The audit report found the act to be a “serious irregularity”, due to which the branch is now facing losses of Tk 173.69 crore.
The managing director again engaged in a spot of transgression in 2011 for another client of the branch, Nur Jahan Super Oil Ltd.
He gave approval to a demand loan of Tk 65.34 crore, after Nur Jahan Super Oil Ltd failed to make payments for deferred LC amounting Tk 133.60.
Before creating demand loans the board of directors needs to be consulted, a step which was circumvented by the branch and the managing director.
The client has so far repaid only Tk 8.16 crore of the outstanding sum.
Plus, in the same year the branch extended loans of Tk 202.79 crore to Khaleque and Sons, a sister concern of Nur Jahan Super Oil Ltd. As of May 31, Tk 206.20 crore was due.
The branch also extended LC facility without taking adequate collateral from a new client and also approved loan against trust receipt (LTR), both of which have inflicted a potential loss of Tk 150.92 crore.
Its failure to take adequate collateral on two other occasions is costing Agrani another Tk 406.91 crore.
The port city’s Asadganj and Agrabad branches also doled out loans against inadequate collateral and in the process left the bank counting losses of Tk 624.59 crore.
Extending loans against inadequate collateral, however, looks to be a major problem of Agrani. The other branches, too, pandered to it, leaving losses of Tk 300 crore in the wake, OCAG found.
The bank is also facing a loss of Tk 74.62 crore after its loans to Dhaka Dyeing and Manufacturing Company Ltd were classified.
“Despite being operational, the client has failed to repay the regular instalment of the loan and repay the money made available beyond its credit limit,” the report said.
The state-run organisation has also been a victim of the Hall-Mark scam: four of its branches accepted bills valuing Tk 50.13 crore of Sonali Bank’s scandal-hit Ruposhi Bangla Hotel branch after green light from the managing director.
It also lost Tk 48.32 crore after its failure to recover ‘cover fund’ from Al Rajhi Commercial Foreign Exchange in Jeddah.
Agrani paid Tk 30.30 crore as fine last year owing to its inability to set aside 6 percent of its deposits with Bangladesh Bank, as stipulated by the rules.
Syed Abdul Hamid, managing director of the bank, could not be reached for comments.
An official of the bank confirmed the receipt of the audit report towards the end of July. He, however, did not give any further details.
Source: The Daily Star
