Bangladesh Bank (BB) has endorsed a stance of Basic Bank not to reschedule the loans, taken through fraudulent acts, by paying 2.0 per cent down payment, officials said.
"The board of directors of Basic Bank has refused a proposal to reschedule such loans on logical ground," the central bank said in a recent letter to the finance ministry.
The BB came up with the response as the ministry of finance sought its opinion as the borrowers had been trying to avail of the benefit.
According to officials, during the period of 2010-2014, these loans were taken through submitting fake documents, false collateral, not checking updated credit reports, and through fraudulent acts in connivance with the dishonest officials of the bank.
The Anti Corruption Commission (ACC) has filed cases against the borrowers, officials, and people who were involved in those loan sanctioning process.
On May 16 last year, the central bank had issued a circular allowing the defaulters to reschedule their bank loans by paying only 2.0 per cent of the outstanding dues, apparently to bring down the volume of non-performing loans (NPLs) in the banking system.
It had also extended the facility amid widespread criticism that the volume of NPLs was rising constantly and turning into a big burden for the economy.
After the circular was issued, the management of the Basic Bank had placed the proposal, for rescheduling those ill-processed loans, before the board of directors.
However, the board refused the regularise the loans arguing that those who have taken the loans through fraudulent acts cannot be real businessmen and thus the loans cannot be considered for rescheduling under that special facility.
"The board of directors has the absolute authority to approve or refuse the proposal for rescheduling the loans," said the central bank.
The BB further said that the board of directors of banks have been empowered with such authority under the sub-section (1) of section 15 (B) of bank company act 1991.The board is liable for risk management, internal control, and internal audit.
"Not allowing rescheduling of loans which were borrowed fraudulently is a part of the task of risk management by the board of directors," the central bank noted.
When contacted over telephone on Friday, former governor of central bank Dr Salehuddin Ahmed said extending any such facility for such borrowers would not be a right decision.
"These loans are already under risk. If these are rescheduled, the borrowers will get more loans and getting back the money will be totally difficult," he said.
Mr Ahmed rather suggested ensuring that those who have taken loans through illegal means cannot get any more loans from any banks.
"No government intervention is acceptable in any financial matter," he said, adding that it might cause further rise in NLPs.
