Islami Bank to sell property of three SA Group units

Islami Bank has moved to sell off the mortgaged property of three companies owned by Chittagong-based SA Group to recover default loans of Tk 573.74 crore.

Through advertisements, the bank has announced an auction to sell off the machinery and a ship of: Sharija Oil Refinery, Sharija Navigation and Kamal Vegetables Oil.

Sharija Oil Refinery owes Islami Bank Tk 417.84 crore, while Kamal Vegetables Oil owes Tk 153.16 crore and Sharija Navigation Tk 2.73 crore.

“We called the auction as part of the procedure to file a case with the money loan court against the defaulter,” said Arastoo Khan, chairman of Islami Bank.

Contacted, Shahabuddin Alam, chairman of SA Group, said: “Islami Bank called the auction following the legal process -- the Bangladesh Bank instructed them to do so.”

Last year, National Bank put up for sale the mortgaged property of SA Oil Refinery, another subsidiary of SA Group, to recover default loans of around Tk 215 crore.

Six other banks are at wits' end with SA Group about its irregular payment despite lending a helping hand to the business group for restructuring of its loans under a special package offered by the central bank in 2015.

SA Group restructured loans of about Tk 1,000 crore with six banks: Prime, First Security, Bank Asia, Agrani, Janata and Rupali, according to the data from Bangladesh Bank.

The business group had appealed to the central bank to extend its restructuring facility till March of this year but was refused. 

It then went on to file a writ against the banks to avoid paying the instalments, said a senior BB official.

SA Group restructured Tk 55 crore from Prime Bank, Tk 299 crore from First Security, Tk 256 crore from Bank Asia, Tk 109 crore from Agrani, Tk 94.58 crore from Janata and Tk 115 crore from Rupali, according to data from the central bank.

The central bank has recently instructed its Banking Regulation and Policy Department to be cautious about rescheduling proposals of SA Group as the client is irregular in loan payment.

The department was also asked to monitor whether the banks were maintaining the required provisioning against the loans. “The instruction was issued as the client was found to be a wilful defaulter,” the BB official added.

Earlier in 2014, the BB fined Bangladesh Krishi Bank Tk 50,000 for providing Tk 184 crore to two subsidiaries of SA Group despite knowing that it was a defaulter, according to a central bank data.

SA Group of Industries started its journey in 1988 with fast-moving consumer goods such as edible oil, flour, condensed milk, beverage, salt and milk.

Later, the group branched out to real estate, pulp and paper products, tea, and tank terminal for storage of petroleum products. It now has 17 units of industries.

Shahabuddin Alam, founder of SA Group, is also a director of Mercantile Bank.

SA Group's annual turnover stands at Tk 2,500 crore and it employs over 2,500 people, according to its website.