Photo: Messenger
Top 20 defaulters of Al-Arafah Islami Bank PLC, a private sector Islamic bank controlled by business conglomerate S. Alam Group, have a debt of Tk 2,300 crore, of which a paltry total of Tk 61 lakh have been collected in first six months.
Documents obtained from Al-Arafah Islami Bank and Bangladesh Bank (BB) sources show that the private sector bank has failed to collect the defaulted loans despite special instructions of the central bank.
From July to December last year, merely Tk 61 lakh were collected from the top loan defaulters, which is less than one percent of the total defaults. The bank in question was able to collect this money from only 3 out of the top 20 defaulter companies. This startling information was obtained by analysing the loan data of the bank.
According to the data, the top 20 defaulters of Al-Arafah Islami Bank owe close to Tk 2,299.48 crore, which is 5.1 percent of the bank's total loans. Meanwhile, these 20 defaulters hold 53 percent of the bank's defaulted loans. The bank is not able to collect money from them in any way.
However, the central bank officials are unwilling to accept such a failure of the bank to collect the loan.
An official of the Banking Regulation and Policy Department told The Daily Messenger on condition of anonymity, “Only Tk 61 lakh have been received from Tk 2,300 crore. Is this normal? It can be said that the bank did not take any action to recover the money. Some of the top 20 defaulters may have kindly returned this money. If the bank had taken measures, it seems that at least Tk 100 crore could have been recovered within six months. To find out who the top defaulters are, whether the management or the board has any collusion with them or not. This cannot be accepted at all.”
A top BB official told The Daily Messenger, “This bank is known as a good bank. However, several complaints have been coming against the bank in recent times, which seems to worsen Al-Arafah's situation. In this situation, the concerned branch of the central bank can call for an explanation as to why the loan cannot be collected from the bank's defaulters. Based on the explanation given by the bank, action should be taken against the bank. If this bank also goes bad like other Islamic banks, then there will be a more negative impact on the banking sector. Besides, the collateral taken against loans held by top defaulters is very inadequate. By this, it can be understood that there were other debts associated with the payment of these loans. Those should also be brought up in the investigation.”
Several attempts were made to contact the managing director and chief executive officer of the bank, Farman R Chowdhury to know about these issues. Despite several calls to his number, he did not respond. Later, a query was sent to his WhatsApp number with the identity of the reporter. He did not reply to the message either.
Investigation by this reporter reveal that the top defaulter of the bank is a textile company named The Delta Blended Yarn Mills Limited. Tk 391.55 crore of Al-Arafah's funds are tied to the company, which is 12.7 percent of the total defaults.
Meanwhile, it is not possible to recover the full amount of the loan even with the securities given at the time of taking the loan. Tk 153.35 crore of securities were issued against the company's debt, which is only 39.2 percent of the total debt. Tk 29 lakh have been collected from this company in six months from July to December.
Jaj Bhuiyan Textile Mills is the second defaulter of the bank. Al-Arafah owes Tk 150 crore to this company, which is 5 percent of total defaults. The value of securities taken at the time of granting the bank loan is Tk 95.48 crore, which is 63.7 percent of the total loan. Al-Arafah authorities could not collect a single Taka from this company in the last six months.
The bank holds a defaulted loan of 111.46 crore taka with its third top defaulter namely Libra Infusion Limited, which constitutes 3.6 percent of the total defaults. However, the bank holds securities from Libra Infusion at 96 percent, or Tk 106.89 crore. From July to December, only Tk 26 lakh has been recovered from this company.
Khulna Printing and Packaging, which is fourth on the list, and its other companies have defaulted on over Tk 110 crore. Al-Arafah Islami Bank could not collect a single taka from this company in the last six months. Khulna Printing holds 3.6 percent of the bank's total defaults. Meanwhile, the value of the securities given against the company's loan is only Tk 40 crore, which is only 36.3 percent. That is, Al-Arafah can't collect the full amount by selling the assets provided by this company.
According to the data on non-performing loans provided by the BB, the non-performing loans (NPLs) of Al-Arafah Islami Bank are increasing regularly. In the September quarter of last year, the bank's loan outstanding amount was Tk 44,761 crore. Out of this, the default was more than Tk 2,942 crore, which is 6.57 percent of the total loan.
Meanwhile, at the end of last December quarter, the defaulted loans also increased along with the loans. In the last month of the year, the debt increased to Tk 46,305 crore, and defaulted loans increased by Tk 144 crores to Tk 3,086 crore.
When asked, BB Executive Director and Spokesperson Mezbaul Haque said they need to know why Al-Arafah is not able to collect the loan.
He told The Daily Messenger, “If there was any problem with Al-Arafah's loan, it would have come up in our investigation. As no investigation report has revealed irregularities yet, we cannot say whether there is any problem with these loans. However, the central bank will surely want to know why the loan is not coming back or is not being collected. Apart from this, the issue of collateral in lending should be based on the customer's relationship with the bank. What the bank and the customer did there is their own business.”
Messenger/Disha
