Saddled with Tk 8,300 crore loans to two business groups, most of which have gone bad, Janata Bank has moved to auction property and goods of one -- Crescent Group.

Crescent alone has Tk 3,443 crore in defaulted loans with Janata, most of which was given to the group through irregularities in connivance of the bank's top executive down to branch managers, which Bangladesh Bank had detected earlier.

The other group, AnonTex, has defaulted on loans of Tk 557 crore in June, putting the state-run bank in a precarious situation.

To recover the defaulted loans, Janata, through advertisements on newspapers yesterday, announced separate auctions of the mortgaged property and leather goods of the five firms of Crescent, which swindled money from the bank through fake export bills.

Bidders have to submit applications to the bank's head office or local office concerned by October 31.

Neither Janata officials nor Crescent Group high-ups could give the total market value of the mortgaged property and goods.

The five firms are -- Crescent Leather Products, Crescent Tanneries, Lexco Limited, Rupali Composite Leatherwear and Remax Footwear. 

Two brothers -- MA Kader and Abdul Aziz -- are the main beneficiaries of Crescent.

Aziz is the chairman of Remax Footwear while Kader is the owner of the four other companies. Aziz is also the owner of Jaaz Multimedia, a production house of Bangla movies.

Contacted, Janata Bank Managing Director Md Abdus Salam Azad said the bank went for auction as Crescent failed to keep its commitment to repatriate export proceeds.

The borrower had committed that it would repatriate a significant portion of its export proceeds of Tk 30 crore by September, but it failed, he said.

Moreover, it also could not keep its commitment to bring back $500,000 in export proceeds every week.

The client could not even continue paying regular instalments for the loans taken from Janata, Salam mentioned.

Talking to this correspondent, Crescent Group Chairman MA Kader admitted that they failed to repatriate export proceeds of $500,000 a week, which they had promised to the bank.

He, however, claimed that export proceeds of $700,000 were repatriated in the last two months.

Kader could not give the market value of the Group's property mortgaged to the bank. 

In a recent probe into Janata Bank, the central bank found that Crescent skimmed off at least Tk 765 crore in the name of exports from the state-run Janata and the BB from January last year to February this year.

Janata gave Tk 684 crore to Crescent in advance against 653 overdue export bills.

As of March 30 this year, Janata's Imamganj corporate branch disbursed Tk 2,760 crore in loans to Crescent's five companies, which was 98.4 percent of the branch's total loans.

The other large borrower, AnonTex Group, which was given loans of Tk 5,500 crore in violation of the banking rules, defaulted on loans of Tk 557 crore in June.

In an investigation into Janata in January this year, BB unearthed the matter along with a number of irregularities involving AnonTex, a garment producer and exporter, and asked the bank to mark the loans of Tk 2,643 crore as classified.

The bank was asked to classify the amount by May this year but it ignored the instruction and kept the account regular.

The client was finally marked as a defaulter in June as it failed to continue paying its regulars instalments.

“We classified AnonTex's loans of Tk 557 crore in June,” said the Janata MD.

“The central bank asked Janata to classify the loans of Tk 2,643 crore. But instead of classifying those, we tried to recover the money and managed to get back Tk 2,000 crore from the client,” he said.

The client promised the bank to pay the defaulted amount and continue paying its regular instalments, he pointed out.

The amount of defaulted loans at the bank would go up if the loans given to the two clients could not be recovered, he added.

According to BB data, massive loan irregularities at Janata pushed up the defaulted loan rate to 21.95 percent (Tk 8,596 crore) in June this year from 14.10 percent (Tk 5,345 crore) in December last year.

Janata saw a drastic fall in profitability indicators as it incurred a loss of Tk 1,600 crore in the first six months this year. The bank made a profit of Tk 97 crore last year, according to BB data.

The state-run bank's credit growth increased sharply in the last one year whereas its deposit growth saw an opposite trend.

Janata's deposit growth was 1 percent in June this year while it was 5.54 percent in the same month last year. The bank's credit growth surged to 12.71 percent in June this year, and it was 10.65 percent in the same month last year, shows the data.