Hit by alleged big-business lending scams, the state-owned Janata Bank has sought some Tk 200 billion in an urgent bailout as its capital base plummeted into negative territory, sources said.
Bankers and sources in the banking circles said much of the bank money was taken by some big business groups that include Beximco, S Alam Group and AnonTex during the bygone regime.
The aggregate amount requested includes Tk 100 billion from the finance authority for recapitalization and as much (Tk 100 billion) as a loan support from the central bank, they added.
According to available data, the bank counts a capital shortfall of around Tk340 billion and the current non-performing loans (NPLs) figured high at Tk 605 billion which is rising gradually. It is 61.39 per cent of total disbursed loans.
Managing Director of the Bank Md. Mazibur Rahman has requested the finance ministry to take steps forthwith to heal the existing crisis.
Until September last, the crisis-ridden bank had a provision shortfall of more than Tk 390 billion.
Janata Bank's fund management has been adversely affected by excessive disbursement of loans in the past few years. In the three years of 2021, 2022 and 2023, the disbursed of credits of the bank increased Tk 378.54 billion.
Due to large payouts of loans in favour of few customers and non-recovery of the loans, the bank had to get into liquidity crisis.
In March 2022, Janata Bank, for the first time, borrowed Tk 2.72 billion from the money market to keep daily banking operations running. The amount of that borrowing has steadily increased to cross Tk 200 billion.
Bank's financial strengths were weakened following some lending irregularities. The well-known big borrowers allegedly embezzled the whole mount that belongs to depositors, in collusion with government high-ups and some dishonest bank officials, according to sources concerned.
More than 45 per cent of Janata's loans are accumulated with only five top business groups. The customers have taken loans from banks in the past years "uncontrolled".
"The five groups took the entire loans through irregularities."
Beximco group took Tk 234.07 billion. More than Tk 92.72 billion, Tk 77.74 billion, Tk 38.07 billion and 20.84 billion had been taken as loans by S Alam, Anontex, Crescent Group and Thermex Group respectively.
"The five groups took the entire loans through irregularities," said one source in the post-uprising current management of the bank, adding that the entire amount now turned classified.
Besides, two other big groups--Orion and Bashundhara--also took Tk 32.28 billion and Tk 28.68 billion respectively (funded and non-funded).
A senior official claims that now Janata Bank's ability to borrow money from the money market has waned.
"Shortage of CRR and SLR can occur anytime due to insufficient SLR securities in hand. In that case, one of the largest state-owned banks in the country may face fines, and there is a danger that image of the government as the owner of the bank will be tarnished," he said, underscoring its salvage.
As such, at the 827th meeting of the Board of Directors held in November 2024, the memorandum regarding cash flow and fund situation of the bank was presented.
After reviewing the memo, the board of directors asked the bank to request the financial institutions (FID) and Bangladesh Bank for providing Tk 100 billion and Tk 100 billion each for five years with a special interest rate to meet capital deficit.
Currently, altogether about 75 per cent of the bank's loans are currently considered as distressed assets, from which no interest income is earned.
Capital-adequacy ratio (CRAR) is determined negative 19.36 per cent. For the first time in its history, Janata Bank incurred losses instead of operating profit. Losses in the first quarter of FY '25 stood at Tk 14.74 billion, which is anticipated to cross Tk 25 billion by the yearend.
As of September 2024, the amount of bank deposits is over Tk 1.11 trillion and the amount of loans and advances stood at Tk 985.37 billion. Debt-Deposit Ratio (DDR) was determined at 88.26 per cent.
The bank's earnings in the import, export and foreign-remittance sectors are Tk 333.64 billion, Tk 64.64 billion and Tk 129.32 billion respectively. The number of bank depositors is about Tk 960 billion and that of borrowers is about 0.42 billion.
Contacted over the JB situation, a high official of the financial institutions and banking division said, "We have received the proposal sent by the bank, seeking funds to meet its capital shortfall."
Managing Director of the bank Md. Mazibur Rahman told the FE about the recapitalization exigency: "If the government provides Tk 100 billion, the liquidity base of the bank will be strengthened. On the other hand, loan-disbursement capacity will also increase if the central bank gives another Tk 100 billion."
Paid-up capital of the bank is now Tk 23.14 billion. The government had injected Tk 8.14 billion and Tk 4.0 billion in 2012-13 and 2017-18 respectively.
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