Shahjalal Islami Bank is in great trouble with the acquisition of the loan of contracting company Dhali Construction and a new loan of Tk 408 crore.
According to the reports of Bangladesh Bank (BB), the financial status of Dhali Construction was also not verified while disbursing the loan without adequate collateral. The then Managing Director and the Board of Directors, along with the officers of the concerned departments of the bank's branch and head office, cannot avoid the responsibility of this irregularity.
Dhali Construction took a loan of Tk 129 crore in 2013 from Trust Bank's Dilkusha branch in the capital. At the end of 2015, the loan amount increased to Tk 156 crores.
In November 2015, Dhali Construction applied to Shahjalal Islami Bank to acquire the Trust Bank loan. Dhanmondi branch of Shahjalal Islami Bank acquired Dhali Construction Limited's loan of Tk 118 crore from Trust Bank in December of that year. In December same year, Shahjalal Islami Bank disbursed an additional Tk 188 crore funded and Tk 70 crore unfunded loan to Dhali Construction Limited.
In August 2017, Shahjalal Islami Bank gave another loan of Tk 115 crore. Of this, Tk 85 crores are funded and Tk 30 crores are non-funded.
Shahjalal Islami Bank could not tell Bangladesh Bank how much money has been loaned against any work orders.
Irregularities in Dhali Construction's loan disbursement were found in Bangladesh Bank's inspection. According to the report, Shahjalal Islami Bank did not verify the financial condition of Dhali Construction while disbursing the loan. No information on investment mandates and assets has been verified. Shahjalal Islami Bank Board of Directors instructions were violated while disbursing loan to Dhali Construction. The collateral was not taken while disbursing new loans.
Bangladesh Bank said that these loans are much more difficult to collect. According to the report, Shahjalal Islami Bank forced loans to Dhali Construction due to the failure of various companies to pay their debts. As a result, at the end of April this year, the amount of loan disbursed by Shahjalal Islami Bank to Dhali Construction stood at Tk 408 crore. Out of this, 350 crore funded and 58 crore unfunded loans have been disbursed. Shahjalal Islami Bank is unable to collect the money despite repeated demands. Dhali Construction has mortgaged 721 acres of land and a building measuring 37,000 square feet as security against the loan.
In this regard, a deputy managing director of Shahjalal Islami Bank, on condition of anonymity, told that Dhali Construction is in a good position among the country's contracting companies. We have business relationship with them since 2015.
He said that the company is facing big challenges due to the epidemic. Although we are hopeful of recovering the loan, it will take more time to get the money back. Dhali Construction did this in need of cash. They thought that if we deposit the bill in our bank, the money will be deducted to pay off the loan.
However, when asked about the violation of the bank's board of directors policy in disbursing loans, he refused to comment.
Rafiq Uddin, Managing Director of Dhali Construction Limited said, “Our company has implemented large road and construction projects including several university buildings in the country. We have been challenged by work stoppages during the covid pandemic and abnormally high prices of construction materials. As a result, the project cost increased.”
When asked about repayment of loan from Shahjalal Islami Bank, he said that new projects will be taken up and the loan will be repaid. “Our business relationship with the bank will also continue.”
MM Mizanur Rahman, Advisor of Dhali Construction said that there were some errors in the documents; These will be resolved quickly.
According to the Bangladesh Bank report, Dhali Construction was directed by the board to provide security equal to the investment while disbursing the loan. But despite the 100 per cent security requirement, only Tk 90 crore of collateral (land and building) was accepted against the funded loan of Tk 188 crore. The board was not informed about the investment with less security.
Shahjalal Bank could not provide any information to the central bank's inspection team about the amount of money invested against specific work orders and the number of bills received in respect of those work orders.
According to the report, the board of directors of the bank advised taking a legal opinion before approving funded loans of Tk 188 crore and non-funded loans of Tk 70 crore and mortgaging 721 khata of land. But the bank did not take into consideration the legal opinion while giving the loan. As no collateral is accepted for new loans, the bank's investment becomes risky.
@The report was published in Bengali on print and online versions of The Bangladesh Pratidin on June 11 and rewritten in English by Tanvir Raihan.
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