S Alam drains Janata branch dry

As much as 90 percent of the loans disbursed by a branch of state-run Janata Bank was for S Alam Group, in yet another instance of how the Chattogram-based business giant exerted its influence on the country’s banking sector.
Janata’s Sadharan Bima Bhaban Corporate Branch in Chattogram provided Tk 8,216 crore to S Alam Group, which is 167 percent more than the branch’s single borrower exposure limit, according to the bank’s documents.
The business conglomerate took another Tk 2,233.45 crore from Janata to take the tally to Tk 10,449.45 crore, which is 451.57 percent of the struggling state-run bank’s paid-up capital.
As per law, a bank is not allowed to lend more than 25 percent of its paid-up capital to a single client. At the end of June this year, Janata’s paid-up capital stood at Tk 2,314 crore.
The loans to S Alam, which has controlling stakes in as many as eight banks, accounted for 10.7 percent of Janata’s total disbursed loans of Tk 98,000 crore at the end of June.
As much as 49 percent of the bank’s outstanding loans have turned bad, putting its financial health at risk.
Amid such a situation, the bank on June 25 rescheduled the Tk 1,844.60 crore loans taken by the six companies of S Alam Group for four years — by breaching rules but with special permission from the central bank.
Of the sum, Tk 1,038.75 crore was for S Alam Refined Sugar Industries, Tk 1,186.43 crore for S Alam Trading Company, Tk 696.42 crore for S Alam Vegetable Oil, Tk 221.13 crore for Global Trading Corporation and Tk 1,229.55 crore for S Alam Cold Rolled Steels.
The companies were given the rescheduling facility although S Alam Group had outstanding loans of Tk 8,895.91 crore.
As per banking rules, a fresh loan rescheduling facility can be granted for a client only if it is within the permitted limits.
This was not the case for the S Alam companies: the rescheduled liabilities of the S Alam companies were Tk 4,372.28 crore against the limit of Tk 3,250 crore.
Yet the central bank gave a no-objection certificate for rescheduling the loans on July 28.
However, in its no-objection certificate, the central bank set some conditions, including the loan amount cannot be increased anymore, and the loan amount must be brought within the permitted limits by December 31, 2025.
Saiful Alam, chairman of S Alam Group, and Md Abdul Jabbar, managing director and chief executive officer of Janata Bank, could not be reached for comment.