Finance ministry replaces Janata chairman in less than a year
Janata Bank, it seems, is always in damage control mode. If it is not in the news for loan delinquencies, it is for something else.
And yesterday, the state-owned bank found itself in another delicate situation: the finance ministry yesterday removed its chairman, Jamal Uddin Ahmed, due to his alleged influence in sanctioning loans violating the banking norms.
The decision comes as the government looks to nurse the embattled lender to health after years of financial irregularities and scams.
Ahmed, a former director of the Bangladesh Bank, was appointed chairman in August last year.
Now, 11 months into his three-year tenure he finds himself withdrawn from the post after one-too-many allegations against him, at least four high officials of the bank told The Daily Star yesterday on condition of anonymity due to sensitivity of the matter.
Ahmed allegedly wielded his influence to sanction a good number of large loans.
For instance, officials of the foreign exchange division of the lender's corporate branch have reportedly refused to sanction a large loan as per the instruction given by Ahmed recently.
The branch was operated by the lender's administration section of Dhaka North, but Ahmed transferred it to Dhaka South to have more influence over its decision-making, the officials said.
He even reportedly instructed the human resource department of the bank to transfer the mid-level officials by ignoring the human resource management of the lender.
Also, he started to handle the clients of the state lender bypassing the management, which is a dreadful violation of the banking norms, the officials said.
Ahmed had indulged in similar behaviour as a director of the central bank, said a good number of the Bangladesh Bank officials. He allegedly visited the offices of mid-level officials of the central bank to do the bidding for some corporate groups.
Ahmed did not respond to The Daily Star's repeated request for comments.
Contacted, Md Abdus Salam Azad, managing director of Janata Bank, said the lender had already got the ministry's instruction to remove Ahmed. He declined to comment further on the matter.
The Daily Star has been unable to independently verify the allegations brought against Ahmed.
SM Mahfuzur Rahman, vice-chancellor of BGMEA University of Fashion & Technology, was appointed as chairman of the board and the central bank also gave a no-objection certificate to the ministry's decision yesterday, Azad said.
Rahman, it seems, would have to be strict disciplinarian to clean up the mess that the bank is mired in, thanks to years of lending ill-discipline.
As of March, default loans at Janata Bank stood at Tk 14,117 crore, which is 15.25 per cent of the banking sector's total bad loans, according to data from the BB. The amount though is down 51 per cent from a year earlier, and it is not because of a dramatic improvement in its lending practices or an outsize recovery drive but because of wholesale rescheduling by way of using the central bank's relaxed rescheduling facility offered last year.
Between 2010 and 2015, Janata disbursed more than Tk 5,500 crore to little-known AnonTex Group, involved in the textile business, in violation of the banking rules.
Now, almost the entire amount -- Tk 5,282 crore -- has turned sour.
Crescent Group, another entity involved mostly in leather and footwear industry, has defaulted loans of Tk 3,152 crore with Janata.
Under a large loan restructuring policy in 2015, some 11 corporate groups restructured loans of Tk 14,400 crore. Of the amount, Tk 5,000 crore was restructured by Janata. As much as 90 per cent of these loans had earlier become bad, putting the lender under severe strain.
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