Currently, 75 percent of Janata Bank’s loans are classified as non-performing. By the end of September, the bank’s total non-performing loans (NPL) reached nearly BDT 740 billion. This has led to the possibility of a shortfall in maintaining the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) at any time. This financial crisis was highlighted at the bank’s most recent board meeting. In 2009, the bank’s distressed loans amounted to BDT 14 billion.

The 824th board meeting of Janata Bank took place on October 1. A document presented at the meeting revealed that by September, the bank held deposits amounting to nearly BDT 1.12 trillion, from which it had disbursed loans worth BDT 985.23 billion. More than half of these loans—BDT 499.59 billion—were concentrated among just five corporate groups. Beximco alone accounted for BDT 250.80 billion, followed by S Alam Group with BDT 101.71 billion, Enetex Group with BDT 77.74 billion, Crescent Group with BDT 38.07 billion, and Orion Group with BDT 30.11 billion.

According to Janata Bank officials, after the Awami League assumed power in 2009, the board of Janata Bank began appointing political leaders, party-aligned university professors, bureaucrats, and intellectuals. Dr. Abul Barkat, a professor at Dhaka University, was appointed the chairman of Janata Bank. During his tenure, the bank witnessed large-scale misappropriation of funds. This looting continued unabated until the government led by Sheikh Hasina was overthrown on August 5 this year. Political influence was the primary factor in this rampant corruption, and now the wounds inflicted on the bank are becoming increasingly apparent. Without government support, it will be difficult for Janata Bank to survive in the face of extensive looting.

Bangladesh Bank, the country’s central bank, releases a quarterly report on the non-performing loans of the banking sector. According to its report based on June 30 data, Janata Bank’s non-performing loans stood at BDT 480 billion, representing 52.55 percent of its total loans. While the report noted that Janata Bank had no provision shortfall, documents presented at the latest board meeting revealed that the bank now faces a provisioning gap of BDT 267.13 billion. Janata Bank recorded an operational loss of BDT 14.80 billion for the first nine months of this year. Its Capital Adequacy Ratio (CRR), which should have been 12.5 percent, stood at just 3.97 percent by June.

The board document indicated that as of September 30, Janata Bank had potential classified loans totaling BDT 585 billion, approximately 60 percent of its total disbursed loans. However, despite the classification criteria, some loans are displayed as unclassified due to various regulations and special concessions from Bangladesh Bank. The World Bank and the International Monetary Fund (IMF) have flagged classified, Special Mention Account (SMA), rescheduled, restructured, and loans maintained regularly through court orders and interest waivers as distressed assets. Considering this, Janata Bank’s distressed assets are valued at over BDT 750 billion. Although the bank’s declared classified loans may differ, loans identified as distressed assets are essentially non-performing loans. The rising number of distressed assets is attributed to concentrated lending to a few large borrowers and failing to recover the loans. This figure could be even higher if agricultural and other small loans are considered.

Historically, Janata Bank has been a significant player in the country’s interbank money market. Government and private banks regularly borrowed from Janata Bank for daily transactions. However, for the first time in history, Janata Bank borrowed BDT 2.72 billion from the money market in March 2022. Since then, the bank’s borrowing has continued to increase. As of October 1, Janata Bank’s borrowing from the money market reached BDT 191.14 billion. Due to its liquidity crunch, the bank has struggled to maintain its CRR and SLR with the central bank.

The board document stated that due to the current poor liquidity situation, the bank is maintaining its CRR by borrowing through repo agreements against the surplus portion of treasury bills and bonds held as SLR. However, the surplus has nearly depleted, making it impossible to borrow further as needed through repo agreements in the money market. Consequently, the bank faces a real risk of shortfalls in both CRR and SLR, which could result in substantial fines from the central bank. Such fines could severely damage the bank’s reputation.

The document further pointed out that excessive loans had been issued to a small number of borrowers through specific branches, which resulted in an abnormal growth in loans and a concentration risk at these branches. In 2022, loan growth stood at 21.79 percent, and in 2023 it reached 15.47 percent. As a result, the total amount of loans disbursed by Janata Bank increased from BDT 699.66 billion in 2022 to BDT 983.89 billion by the end of 2023. Over the two years, Janata Bank’s loan portfolio grew by BDT 280 billion, most of which was granted to a few top borrowers.

Beximco Group, owned by Salman F Rahman, is Janata Bank’s largest borrower. Before 2009, Beximco’s loans amounted to less than BDT 10 billion. However, over the past decade and a half, the group withdrew billions by opening new companies. As of June this year, Beximco’s 33 entities had a total loan balance of BDT 250.8 billion with Janata Bank, of which BDT 181.75 billion was non-performing.

S. Alam Group is the second-largest borrower of Janata Bank. The group has taken loans amounting to BDT 101.71 billion through five of its companies. Other major borrowers include AnonTex Group with BDT 77.74 billion, Crescent Group with BDT 39.23 billion, Orion Group with BDT 30.11 billion, Thermex Group with BDT 20.32 billion, Ranka Group with BDT 17.54 billion, Bashundhara Group with BDT 19.94 billion, Ratanpur Group with BDT 12.27 billion, Sikder Group with BDT 8.29 billion, and Janakantha Group with BDT 8.11 billion. Among these, the entire loan amounts of AnonTex, Crescent, Ranka, Ratanpur, Sikder, and Janakantha groups have been classified as non-performing loans.

In the decade and a half following 2009, five chairmen served at Janata Bank. After the Awami League came to power, Dhaka University professor Dr. Abul Barkat was appointed as the bank’s chairman on September 9, 2009, and served until September 8, 2014. He was succeeded by Sheikh Md. Wahid Uz Zaman, former principal secretary to Prime Minister Sheikh Hasina, who served from February 8, 2014, to December 7, 2017. From February 28, 2018, to August 27, 2019, Luna Shamsuddoha of Doha Tech held the position. Dr. Jamaluddin Ahmed, general secretary of the Bangladesh Economic Association, served from August 24, 2019, to July 28, 2020. Lastly, Dr. S.M. Mahfuzur Rahman, another Dhaka University professor, led the bank from July 29, 2020, to August 27 of this year. During their tenures, several influential leaders from the Awami League and Jubo League, as well as pro-Awami intellectuals and bureaucrats, were appointed as directors of the bank.

At least three former directors of the Janata Bank board told Bonik Barta that there was no environment for independent opinions. Chairmen and politically influential directors pushed their agendas, often pressuring for loans to known financial delinquents. Their interference extended to all operations, from purchases to daily activities. After witnessing such corruption and irregularities, these directors resigned from the board. However, they refused to be quoted on the record.

The financial downfall of Janata Bank, including scandals with AnonTex, Crescent, and Bismillah groups, is believed to have started during the tenure of Dr. Abul Barkat’s board. When asked about the irregularities during his leadership, Barkat told Bonik Barta, “The chairman or board doesn’t disburse loans. Loan proposals come to the board after passing through multiple stages. We followed proper procedures in approving them. I never heard of any irregularities during my time.”

Influential directors during Barkat’s leadership included former student leader Balram Poddar, Nagibul Islam Dipu, Md. Abu Naser, and Md. Mahbubur Rahman Hiron. All of them held important positions in the Awami League and Jubo League. Dr. Jamaluddin Ahmed also served a long tenure on that board. Later, Cumilla-2 MP Selima Ahmed, a ruling party member of parliament, became an influential director.

Several former and current officials of Janata Bank informed Bonik Barta that these directors interfered in all activities. Balram Poddar and Nagibul Islam Dipu were directly involved in the loan scandal involving AnonTex and Crescent Groups. At one point, AnonTex officials were even robbed while trying to pay Balram Poddar’s loan commission.

Under pressure or influence from the chairmen and directors, many senior and mid-level officials of Janata Bank became involved in irregularities and corruption. From January 28, 2008, to July 27, 2014, S M Aminur Rahman served as the managing director (MD) of the bank, followed by Md. Abdus Salam, Md. Abdus Salam Azad, and Md. Abdul Jabbar.

When asked who was responsible for the current situation of the bank, Md. Abdus Salam Azad told Bonik Barta, “After 2009, S M Aminur Rahman acquired several large loans from various banks, which later proved detrimental to Janata Bank. Due to political pressure and interference from the board, I could not carry out my duties independently. In some cases, there was no way to avoid political pressure. Nevertheless, I tried my best to protect the bank’s interests.”

From May 3, 2023, to September 19, 2023, Md. Abdul Jabbar served as the MD of Janata Bank. On September 19, the Ministry of Finance removed him along with the MDs of five other state-owned banks. When asked about the current state of the bank, Jabbar told Bonik Barta, “I served as the MD of Janata Bank for a short time. Although I couldn’t make significant changes, I ensured the bank did not suffer further damage. I made efforts to prevent any more losses.”

Before becoming MD, Abdul Jabbar was the senior deputy MD and head of the credit committee at Janata Bank. Under his committee, the loan proposals of large groups, including Beximco, were approved. When asked whether he protested against any irregularities during his time, he replied, “I tried my best within my capacity. Much depended on government policies.”

A current official at the bank, who requested anonymity, told Bonik Barta, “I am not originally from this bank. I was transferred here after a promotion from another bank. It seems that most officers at Janata Bank’s headquarters, local offices, and corporate branches are involved in irregularities and corruption. Some are forced into irregularities, while others engage in fraud in exchange for bribes or commissions. At least three current directors on the board are deeply corrupt. Janata Bank cannot recover while these corrupt officials and directors remain in power.”