Loans from Janata, NBL: S Alam, Nassa got Tk 2,544cr waiver in breach of rules
Chattogram-based conglomerate S Alam Group and garment manufacturer Nassa Group were given interest waivers amounting to Tk 2,544 crore bypassing banking rules, in a testament to the outsize influence oligarchs had on the banking sector during the Awami League-led government of the past 15 years.
What is more baffling is that the central bank provided the no-objection certificate (NOC) in favour of the two business giants, who are led by individuals with easy access to former prime minister Sheikh Hasina, for getting the waiver facility.
For all latest news, follow The Daily Star's Google News channel. Founded in 1985 by Saiful Alam, a relative of former AL politician Akhtaruzzaman Chowdhury Babu and former Land Minister Saifuzzaman Chowdhury, S Alam Group has grown into one of the largest conglomerates in Bangladesh. The business giant owns controlling stakes in eight banks.
Nassa Group is led by Nazrul Islam Mazumder, who is the chairman of Exim Bank and the private bank owners' forum Bangladesh Association of Banks since 2008.
As per the central bank rules, banks can waive the partial or whole interest in the case of the death of the borrower or the closure of the project due to natural calamity, pandemic, flood or any other act of God.
Besides, a Bangladesh Bank notice on April 21, 2022 barred the waiver of interest that had already been transferred to their income segment.
But the companies of S Alam Group and Nassa Group that were given the interest waiver facilities were operational; no natural disaster took place in that time.
And the lenders -- National Bank in the case of S Alam Group and Janata in the case of Nassa Group -- waived the interest by halting the income segment, which was a violation of the banking rules.
On December 22, 2021, the central bank provided NOC through seven letters to National Bank for allowing the interest waiver facility to the loans, taken from the bank's Khatunganj branch in Chattogram and Gulshan branch in Dhaka in 2003.
The ailing National Bank waived Tk 2,283 crore as interest on the loans of eight companies of S Alam Group: S Alam Super Edible Oil got Tk 715 crore interest waiver, S Alam and Company got Tk 456 crore, S Alam Vegetable Oil got Tk 322.77 crore, NAF Trading Tk 249.96 crore, Adil Corporation Tk 185.23 crore, Pusti Vegetable Ghee Tk 158 crore; Fairy Trade international Tk 122.87 crore and S Alam Brothers Tk 73.14 crore.
As a result, S Alam Group ended up repaying the principal amount of Tk 4,928 crore and no interest, according to central bank documents.
Some companies of Sikder Group, which held controlling stakes in National Bank then, had loans in three Shariah-based banks controlled by the S Alam Group and National Bank provided the interest waiver facility to S Alam Group on the assurance that Sikder Group would be afforded the same facility in the Islamic banks, The Daily Star has learnt from people with knowledge of the tacit deal.
Thanks to the huge interest waiver to S Alam Group, National Bank, one of the earliest private sector banks in Bangladesh, logged a loss of Tk 3,260 crore for 2022. The lender is yet to recover from this hit, according to National Bank officials informed with the proceedings.
"As far as I know, S Alam Group do not have any loan in our bank," said Touhidul Alam Khan, managing director of National Bank.
The companies have repaid all their loans and closed the accounts with the bank, said Khan, who joined the lender on January 25 this year from Premier Bank.
Similarly, at the 654th board meeting of Janata Bank in 2021, a Tk 261 crore interest waiver facility was approved for two companies of Nassa Group: Nassa Taipei Spinners and Nassa Spinners.
Janata had acquired the Tk 120 crore loans of the two Nassa companies in 2008 from Southeast Bank and Islami Bank.
The state-owned bank gave Nassa Taipei the facility subject to the collection of Tk 156.12 crore by August 31, 2021, as per the meeting minutes.
The central bank in June of 2021 rejected the facility as Janata approved the waiver violating banking norms. BB later walked back on the decision and approved the interest waiver.
Md Abdul Jabbar, current MD of Janata Bank, and Md Abdus Salam Azad, former MD, could not be reached for comment despite repeated attempts.
"The interest waiver facility by violating rules creates a bad example in the banking industry and other borrowers are motivated by the example," said Anis A Khan, the former chairman of the Association of Bankers Bangladesh, a platform of banks' chief executives.
This practice goes against good governance in the banking sector, said Khan, also a former MD of Mutual Trust Bank.
The Daily Star could not reach Alam and Mazumder for comment, while BB declined the request for comment.
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