Staff Correspondent

Sonali Bank suffered a loss of Tk 423 crore by investing Tk 500 crore in a risky investment of Tk 500 crore by violating rules by paying premium to companies with weak financial base, buying placement shares in violation of rules and failing to include the placement shares in the capital market.

Apart from this, bad and harmful i.e. classified overdue loans amounting to Tk 457 crores as a result of disbursement of loans in violation of the terms of the sanction letter and without taking adequate collateral security despite classified liability of subsidiaries. Loans have also been given by mortgaging the land.

The Audit Department found such financial irregularities of 1 thousand 494 crores against the state-owned Sonali Bank. The compliance audit report on the bank's 2023 accounts, which was tabled in the National Parliament last Wednesday, highlighted this irregularity.

According to the report, from 2019 to June 2021 by the head office of Sonali Bank Limited, by paying premiums to institutions with weak financial base, irregularly purchasing placement shares and failing to include the placement shares in the capital market, the bank made a risky investment of Tk 500 crore.

A review of the investment documents shows that as per the decision of the 662nd meeting of the Board of Directors of Sonali Bank LC in favour of Best Holding Limited through Project SVP in private placement shares at the rate of 65 rupees per share with a premium of 55 rupees (face value of 10 rupees) a total of 7 crore 69 lakh 23 thousand 500 in 100 shares.

An investment proposal of Tk 1,500 crore was approved and distributed on October 15, 2019. Best Holding Limited's authorized capital as of June 30, 2019 is Tk 1000 crore but the paid up capital is only Tk 8 crore 83 lakh and the outstanding amount is Tk 2 thousand 49 crore. As a result, the financial leverage of the organization is very high and the bank deposits have been made risky by taking investment decisions despite knowing that the investment is risky.

However, in 2017, in view of Sonali Bank's Tk 1,200 crore investment proposal, in the 509th meeting of the bank's board of directors, the project's profit was negative and according to the submitted financial statements, the project was not profitable, and the investment proposal was rejected.

According to the report, 15 crore 86 lakh shares from Best Holding Limited and the remaining 26 crore 33 lakh shares were sold to other institutions at a face value of 10 taka, but the institution established on weak financial basis paid an additional premium of 55 taka over the face value in the placement shares. Due to the investment, the bank has suffered a loss of Tk 423 crore 7 lakh.

In this regard, Sonali Bank informed the audit department, following Bangladesh Bank's DOS circular, the share price stood at Tk 82.97, which was set at Tk 65 following conservative approaches. At the time of application, the previous financial affairs mentioned the paid-up capital of Tk 8.83 crore, but at the time of application consideration, the paid-up capital was Tk 550 crore 83 lakh.

According to the latest balance sheet, the paid up capital of the company is 870 crore taka, and the outgoing capital is 1 thousand 369 crore taka.

However, the company's reply was not helpful in settling the objections, the audit department said, considering its paid-up capital and exits at the time of purchase of placement shares, subsequent changes in balance sheet financial position required fresh assessment.

Shares of the company have been purchased by other companies at a face value of Rs. As a result, banks' deposits have been put at risk due to excessive purchases by the bank, taking into account abnormal revaluation reserves, failure to be included in the capital market and non-compliance with the conditions of the sanction.

On the other hand, IDCP and working capital loans were granted and distributed in favor of Sinha Melamine Industries Limited, the cantonment corporate branch of Sonali Bank Limited without confirming the ownership of the mortgaged property, which means that the amount of classified bank unpaid loans is 18 crore 45 lakhs.

According to the report, the Ashulia Land Office of the government has informed that Sinha Melamine Industries Limited has 7.27 acres of government land in the mortgage plot No. CS and SA 632 RS 1190, 1191, 1192 of which 106 percent of the land is mortgaged. done Due to government property in those spots, the rent of that land could not be waived after disbursement of loan.

Loans are sanctioned and disbursed without confirming the actual ownership of the property. The bank issued a final notice to the customer for recovery of dues, but the customer did not come forward to pay the amount.

In this regard, Sonali Bank has informed the audit department that the case filed against the customer for recovery of money was settled in the credit court.

A case under NI Act is pending against the customer for dishonoring the cheque. On the other hand, Sonali Bank Limited New Market Branch has disbursed loans without complying with the conditions of approval during the period from 2019 to June 2021, leaving Tk 482.2 million.

According to the report, although this amount is unpaid to the customer MS Specialized Cold Storage Limited, M/s MS Organic Food and Beverage Industries Limited and SRF Enterprise, the bank has not filed a case against the borrower company as per the terms of the sanction letter. Place and CC (Hypo:) Loans provide withdrawal facility without any policy and the bank has no control over the pledged warehouse. The report mentions that in 2021, there are 482.2 million Tk of overdue bad debt from customers due to continuous new loans to the same customers in collaboration with the branch manager and head office from 2014 to 2018 without verifying the performance of previously given project loans. On behalf of Sonali Bank, the audit department has been informed in writing that legal action is being taken to recover the dues of MS Specialized Cold Storage Limited, M/s MS Organic Food and Beverage Industries Limited and SRF Enterprises.

According to the audit report, despite the red zone in the stress testing and poor financial performance, despite the decision of the management meeting, the overdue outstanding debt of the bank is Tk 600.91 million. Apart from this, shortage of jute in warehouses, non-deposit of jute sold as blocked loan and disbursement of mortgaged property with overvaluation of loans resulted in outstanding debt of Tk 65 crore 94 lakhs.

Overvaluation of land, disbursement of current capital loans without taking new collateral and project loans and failure to collect the loan amount as per rescheduling approval, the bank's loss of Tk 14.55 million and irregular rescheduling facilities, as the bank failed to collect the money as per the terms and conditions.

Tk 172 crores 58 lakhs due to sanction of block loans and non-payment of installments on time due to deficiency of jute in pledge warehouse, financial loss of 42 crores 51 lakhs due to giving facilities to pay monthly installments of employee house construction loans by irregularly paying dividends to officers and employees by keeping SBRSS and savings accounts open.

The former governor of Bangladesh Bank regarding the financial irregularities of the banks. Salehuddin Ahmed said, there is no escape if irregularities are detected in developed countries. But even if we find irregularities here, there is no exemplary punishment. Debtors roam openly. No action is taken against them. But debtors abroad cannot buy petrol or even board a plane and unlike us here, they walk around with VIP status.

Financial irregularities in the banking sector will not stop unless this culture is stopped. He said that besides taking legal action against the officials involved in the irregularities, those responsible involved in the management cannot be exempted. He also said that we have deficiencies in all aspects of bank management, management and supervision. Even though there are enough regulations in the country, they are not followed properly and there is a lack of good governance.

Executive Director of Transparency International Bangladesh (TIB). Iftekharuzzaman said, irregularities in the banking and financial sector have gone rampant due to the lack of assurance of exemplary punishment against corruption and defaulters.

As a result, the crisis of confidence among depositors is increasing. Irregularities like corruption and delinquency are putting an increasing burden on the people. He commented that the regulatory authorities including Bangladesh Bank need to take effective steps to stop irregularities and corruption to restore order in banking and financial institutions.