The Chattogram Port Authority is facing significant challenges after placing funds in weak and problematic banks. Several banks have ceased paying interest on the port’s term deposits, exacerbating the issue. Despite repeated attempts, the authority has been unsuccessful in withdrawing its deposits from banks currently categorized as being in the red zone. As a result, the port is unable to reinvest the funds, hindering the financing of ongoing development projects. Describing this behavior as uncharacteristic of the banking sector, the Chattogram Port Authority highlighted the financial damage in a letter sent to the headquarters of Bangladesh Bank this week.

The letter stated that the port’s inability to receive interest from these banks and the failure to liquidate and reinvest the funds have made it impossible to finance critical ongoing projects.

To ensure the smooth execution of development projects and equipment procurement, the letter urged Bangladesh Bank to instruct the concerned banks to liquidate the deposits and return the funds to the port authority’s accounts.

According to sources, one of the banks that have placed the Chattogram Port Authority in this difficult situation is Padma Bank (formerly Farmers Bank). From the beginning, Padma Bank’s operations have been marred by controversy. The bank’s founders allegedly engaged in corruption and irregularities, leveraging government deposits to further their interests. Currently, Padma Bank is near bankruptcy and is attempting to merge with other institutions. The port authority has BDT 1.79 billion invested across 22 term deposits at Padma Bank’s Khatunganj branch alone. Despite banking regulations requiring interest payments upon the maturity of deposits, Padma Bank has stopped paying interest to the port authority since February last year. In response, the port authority requested liquidation of 6 out of 22 term deposits, amounting to BDT 950 million. However, the port authority received no response from the bank. In addition to Padma Bank, other banks failing to return deposits to the port authority despite repeated requests include BASIC Bank, ICB, National Bank, and Global Islami Bank.

Port officials have expressed deep concern over the instability in these weak banks, particularly those associated with the S. Alam Group. Following the fall of the Sheikh Hasina-led government amid mass protests, cracks in the banking sector have become increasingly visible. The exposure of widespread embezzlement within banks has led to a crisis of confidence. In some cases, banks have even closed branches due to their inability to return depositors’ funds amidst financial turmoil.

Recent data from the Chattogram Port Authority shows that the port has nearly BDT 10 billion invested in term deposits across 21 branches of four banks affiliated with the S. Alam Group. This includes BDT 2.12 billion in four branches of Social Islami Bank, BDT 1.9 billion in four branches of First Security Islami Bank, BDT 1.15 billion in two branches of Global Islami Bank, and BDT 4.11 billion in 11 branches of Union Bank.

Md. Omar Faruk, Secretary of Chattogram Port, told Bonik Barta, “As depositors, we have the right to withdraw our funds from the bank. It’s not only disappointing that we aren’t receiving interest on our investments, but this is also against banking norms. This situation is causing significant financial harm to the port. Moreover, we feel unsafe with our funds in weak and troubled banks, but withdrawing them is proving to be impossible. That’s why we’ve informed the central bank about the obstacles we’re facing in financing ongoing development projects.”

The Chattogram Port Authority’s funds, maintained as fixed deposits, are spread across various public and private banks. These funds are primarily generated from activities such as docking, cargo handling, yard rentals, and land leases. The funds are then used to finance the port’s ongoing infrastructure development and various projects. Additionally, operational costs such as equipment, personnel, and other expenses are also covered by these funds. Therefore, ensuring that the Chattogram Port’s deposits remain risk-free is crucial for maintaining normal import-export activities.