Photo: Collected
Allegations of significant irregularities and fraud have emerged regarding the disbursement of Export Development Fund (EDF) loans, which are sourced from the country's foreign exchange reserves. Several prominent business entities, including the Beximco Group associated with the outgoing government's advisor Salman F Rahman, as well as Crescent, Bismillah, and SB Punya Group—companies previously implicated in banking sector loan scandals—have been accused of misappropriating EDF funds under the guise of loans.
Akij Group also did not return the loan on time. Apart from this, there are many other reputable companies that have availed EDF loans. Due to the dollar crisis, the central bank is not able to adjust it from the accounts of the banks through which this loan was given. As a result, a large part of the EDF loan has become overdue and defaulted.
According to a report from Bangladesh Bank, 600 million or 60 crore dollars (about Tk 7,000 crore) have been stuck for a long time with the top 40 beneficiaries of this fund. Of this, 20 institutions under the jurisdiction of the central bank's head office in Dhaka have about 56 crore dollars, the majority of which are with the Crescent, Bismillah, and Beximco groups.
Twenty exporters under the jurisdiction of the Central Bank's Chittagong office have about 3 crore dollars. Stakeholders are blaming the lack of supervision by Bangladesh Bank for the EDF loan not being returned on time, as this loan concession requires prior approval of the Forex and Treasury Management Department of the central bank.
It has been alleged that the politically influential have become easy beneficiaries of this loan due to the recent resignation of the central bank deputy governor Kazi Saidur Rahman, who used to suppress concerns in supervising these loans. Kazi Saidur Rahman's mobile phone was called for a statement on this matter, but he did not pick up.
However, an official of the department, who did not wish to be named, told The Daily Messenger that EDF has been overdue for a long time. As some of the customers are influential, they did not show the courage to bring back these dollars under pressure from the respective banks and the central bank. Again, due to the lack of dollars in the banks, adjustments could not be made from their accounts. Now a new government is coming. If they want, even if they press, these debts can be recovered.
EDF was formed in 1989 from foreign exchange reserves to provide low-interest dollar loans to exporters under back-to-back LCs to import raw materials for export. Entrepreneurs get a maximum of 270 days to repay the loan, subject to the approval of the central bank. But the companies in question did not pay it on time.
According to Bangladesh Bank sources, Beximco Group did not repay EDF loans on time due to political influence. About 10 crore dollars of EDF debt is withheld by four companies of this group. A major part of this loan has been taken through Janata Bank. Out of this, 2 crore 4 lakh dollars to Bextex Garments, 2 crore 52 lakh dollars to International Knitwear and Apparels, 2 crore 45 lakh dollars to Aces Fashion, and 2 crore 3 lakh dollars to Apollo Apparel Limited.
In this regard, Beximco Group GM Abu Shafiullah said, "During the corona pandemic, we did not get the income from the exports on time. Due to this, the loan was not adjusted. But now we are slowly trying to repay this loan."
Akij Jute Mills, a subsidiary of Akij Group, has an EDF loan of around 2 crore 8 lakh dollars. Shahjahan Bablu of SB Punya Group is also a beneficiary of the EDF loan. His company, SB Exim Bangladesh, owes about 3 crore 17 lakh dollars in EDF loans.
Three companies of Crescent Group's MA Quader and his brother, Jaaz Multimedia chief Abdul Aziz, are also beneficiaries of EDF loans. These loans were taken out with fake documents, without exports being made, under the guise of forgery. About 17 crore dollars in EDF loans are owed by these institutions. The majority of this loan has been taken out from Janata Bank.
Out of this, 6 crore 17 lakh dollars were withdrawn in the name of Remex Footwear, 5 crore 52 lakh dollars in the name of Crescent Leather Products, and 5 crore 17 lakh dollars in the name of Rupali Composite Leatherware.
On the other hand, the three companies of Bismillah Group, which is under scrutiny for stealing Tk 1,174 crore from five banks including Janata Bank by creating fake export bills, are also beneficiaries of EDF loans. The institutions looted EDF loans of about 12.5 crore dollars from some banks including Janata. Out of this, 4 crore 15 lakh dollars have been withdrawn in the name of Bismillah Towels, 5 crore 81 lakh dollars in Alpha Composite, 1 crore 5 lakh dollars in Hindolwali Textiles, and 97 lakh dollars in the name of Shahreesh Composite.
In this regard, Abdul Jabbar, Managing Director of Janata Bank, said, “After I joined the bank as MD, no new customer was given an EDF loan. Most of the previous outstanding EDF loans have been repaid. What little is left now is Beximco's.”
According to the concerned sources, most of the EDF loans are taken out through irregularities, fraud, and collusion and are not being returned on time. In particular, a few customers have been repeatedly given EDF facilities without confirming whether the goods were exported against the loan or whether the proceeds were repatriated against those exports. Through this, EDF facilities have been misused.
On the other hand, it was not possible to get back the loan due to non-exportation on time and export value not coming to the country. Against this loan, the banks have created forced loans in takas in favor of the concerned institutions due to non-repatriation of export earnings.
It is reported that after the outbreak of coronavirus, the size of EDF was increased from 350 crore dollars to 500 crore dollars in April 2020. It was further increased to 700 crore dollars in phases. However, after the onset of the dollar crisis from April 2022, interest rates were raised to discourage EDF borrowing.
However, the central bank issued various regulations in March last year. The disbursement of loans from this fund was stopped in the middle of last year to meet the conditions of the loan of 4.7 billion dollars originally given by the IMF. But it has been reintroduced due to lobbying by influential parties. As of the latest report, the fund's position has dropped to 260 crore dollars.
Messenger/Disha
