Dhaka, Bangladesh (BBN)– The central bank of Bangladesh has dealt with the Hall-Mark loan scam involving Sonali Bank’s Ruposhi Bangla Hotel branch in accordance with the existing banking rules and regulations to protect the depositors’ interest, a top central bank official said.
“The central bank has acted on the Hall-Mark loan scam that has also involved the state-owned Sonali Bank since 2010 as per the existing rules and regulations,” the Bangladesh Bank (BB), the country’s central bank, official told BBN in Dhaka.
After detecting the loan irregularities in March 2010, the central bank had asked the top management of Sonali Bank to take necessary actions in this connection, the BB official added.
The central bank found in an investigation that only BDT 460 million was used in lending by the Ruposhi Bangla branch of Sonali Bank, while the amount of deposit with that branch was BDT 9.94 billion as of March 31, 2010.
Of the sum lent out, Hall-Mark Group received the major portion against its three letters of credit (LCs) for export, in violation of the existing rules and regulations, according to the BB officials.
They also said the Ruposhi Bangla Hotel branch of Sonali Bank provided loan facilities to Hall-Mark under pre-shipment credit (PSC) exceeding its head office- approved limit.
Both the Sonali Bank headquarters and the branch submitted their replies to the allegations of irregularities to the central bank on October 13, 2010, saying that they have already brought down the limit of PSC as per their approved limit for such loans through “recovery of the credit from the party”.
The authorities of Sonali Bank Limited (SBL) had also promised that they would remain careful about exceeding the limit of such credit in the future, according to the BB’s special investigation report.
Besides, the branch lent BDT 6.94 billion to its headquarters as of March 31, 2010 after providing loan facilities to the clients.
“The figures of both the lent-out money and deposit indicate that the branch of Sonali Bank was a small one in 2010. As a result, the branch did not come under BB’s comprehensive supervision in 2011,” the BB official said while replying to a query relating to supervision and monitoring of the branch.
The BB selects at least 200 large branches out of around 1200, which contribute 75 per cent businesses to Sonali Bank, for its comprehensive supervision each year, the central bank official said, adding that the rest of the branches come under this supervision phase by phase.
Interestingly, the Ruposhi Bangla branch turned into a borrower by the end of 2011 from a lending entity due mainly to increase in loan portfolios gradually.
The borrowing of the branch from the headquarters rose to BDT 14.96 billion as of June 30 last from only BDT 3.25 billion as of December 31, 2011. It was BDT 10.65 billion in March 31 this year, the data showed.
“It seems to be mysterious that the financial indicators did not draw the auditors’ attention,” the central banker said, adding that it has also indicated the failure of the top management of the largest state-owned bank.
Early this calendar year, several commercial banks complained with the central bank that they could not get payments against the ‘accepted inland bills’ of Sonali Bank.
“We’ve started our special inspection of Sonali Bank’s Ruposhi Bangla Hotel branch on the basis of the complaints,” the BB official noted.
In May last, the central bank found involvement of the top management and directors of the bank in financial irregularities, in which companies, including Hallmark Group, swindled BDT 35.47 billion out of the bank’s Ruposhi Bangla Hotel branch in the capital.
BBN/SSR/AD-20Oct12-1:50 pm (BST)
