Once known as one of the best banks in the country, the state-owned Janata Bank Limited was the main source of funding for entrepreneurs. Many successful entrepreneurs, once funded by Janata Bank, later became industrialists, yet this bank now tops the list of defaulted loans.
The number of loans defaulted by the banks has doubled in just three months, shows Janata Bank records which tops the list of defaulted loans in the banking sector. As of March this year, the defaulted loans were 169.50 billion taka, which increased to 286.65 billion taka in June, while defaulted loans accounted for 16.15 per cent of the total disbursed loans, which has now increased to 30.43 per cent, and a major The loans were issued through the following irregularities.
Janata Bank disbursed 42 percent of the total defaulted loans or Tk 400 billion to three influential industrial groups. The bank disbursed a loan of Taka 942.07 billion till June. As bank performance began to decline a decade ago, well-known business groups left the banks while many more controversial and anonymous business groups took their place.
Meanwhile, large-scale loan irregularities and scams also hit Janata Bank, resulting in an increase in defaulted loans and non-recovery of such loans even after being rescheduled repeatedly. It accounts for 10 per cent of the total defaulted loans in the entire banking sector, while Janata Bank has three times that. Three big businesses have accumulated a major chunk of loans, while the bank on the other hand tops the list of defaulted loans – the state-owned bank is facing a bigger crisis overall.
Recently, the International Monetary Fund (IMF) approved a US$ 4.5 billion loan for Bangladesh, but the lending agency put a condition of reducing defaulted loans by 10 percent. After that, Bangladesh Bank ordered Janata Bank to cut defaulted loans by 10 percent. Moreover, Bangladesh Bank officials have been monitoring and coordinating Janata Bank for more than a decade, yet the financial condition of the bank is not improving. Instead, Janata Bank continued to provide loans and other facilities to several groups and Bangladesh Bank is also approving those under special consideration. Amid this situation, Janata Bank is borrowing an average of 20 billion taka every day to run its daily operations.
Janata Bank is not repaying the US dollars that the bank had borrowed from the Export Development Fund (EDF) set up with foreign exchange reserves. As a result, the EFD facility available to the customers was also stopped.