Bangladesh Krishi Bank has used the government's waiver of farm loans of up to Tk 10,000 to hide its own past irregularities, according to an investigation by the daily Samakal. The paper says Tk 10,000 loans were inflated with interest to around Tk 100,000 in breach of the rules, then written back down to Tk 20,000 so that the bank could claim the waiver money from the government.
Under a 1993 Bangladesh Bank directive, no further interest may be charged once a loan with interest reaches twice the principal. Samakal says Krishi Bank ignored this, booked the extra interest as income, and is now writing it off to tidy its accounts. A state bank is not allowed to waive interest it has already taken into income.
The cabinet decided at its first meeting on 26 February to waive farm loans of up to Tk 10,000 with interest. Because auditing the loans of more than 1.4 million farmers first would take too long, it was agreed to pay first and audit later. After a board meeting on 8 June the bank asked the government for Tk 293.63 crore, and after another on 11 June for a further Tk 124 crore.
Samakal examined 33,479 waived loans, 4.85 percent of the bank's total. Of these, 11,446 were created between 1979 and 1991. The borrowers owed Tk 34.5454 crore; the bank first cut Tk 5.35 crore of interest from its income to bring each loan within the limit, then took Tk 29.4949 crore from the government.
One case cited is Rafiqul Islam of Sakhipur in Tangail, shown to the board as owing Tk 20,000 when his actual balance was Tk 154,439. In Araihazar, Narayanganj, the reporter visited the addresses the bank held for eight borrowers whose loans were waived, and later for ten more the branch supplied, and found none of them; the local ward councillor said he did not know them either.
In a written reply Krishi Bank denied any irregularity. It said interest has been calculated under the 1993 directive, no interest is charged after a loan doubles, loans without records cannot have interest waived, and 709,679 farmers benefited and became eligible for new credit. It said it would act on any irregularity brought to its notice.
Bangladesh Bank spokesman and executive director Arif Hossain Khan told Samakal the allegations were serious and amounted to fraud. The central bank would look into them through inspection, carry out a special audit of Krishi Bank if needed, and take strict action if they proved true, he said.
Photo: Press Information Department / Wikimedia Commons (public domain)
Source: samakal
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