Dhaka, Friday


29 March 2024


Business Insider Bangladesh

BB fines EBL Tk 5 lakh over hiding large loan info

BI Report || BusinessInsider

Published: 22:38, 3 April 2022   Update: 22:40, 3 April 2022
BB fines EBL Tk 5 lakh over hiding large loan info

EBL logo

Bangladesh Bank has fined Eastern Bank Limited (EBL) Tk 5 lakh for concealing information on its large loan details and disbursing credits without the prior approval of the central bank.

A letter of the BB in this regard was sent to the managing director (MD) of the EBl on Sunday, an official of Bangladesh Bank said.

The letter directed the private commercial bank to deposit the penalty sum within the next 14 days. 

If for any reason the money is not deposited within the stipulated time, the fine will be deducted from the bank’s cash reserve with the central bank, the official said.

According to the current banking rules, in case of lending a term loan, a prior approval of the BB is required. At the same time, the commercial bank must share the central bank information of their term loans every month in a designated form. 

Even if a loan is issued to a director or an associate of the respective bank, the bank should let the Bangladesh Bank know about it. But, the EBL management did not inform the central bank about lending to their affiliates.

At the same time, the bank did not take the prior approval of some large loans from the central bank. Therefore, EBL has violated the central bank rule and banking company law.

According to sources, Eastern Bank did not seek the central bank’s prior approval while lending large sums of money to its affiliates EBL Securities Limited and EBL Finance (HK) Limited.

This has beached the central bank’s respective circular and banking company law. The loans were not allegedly approved by the board of the bank.

In addition, the policy of internal credit risk and rating system issued by the central bank has been violated while lending to the private Super Oil Refinery company.

The central bank had asked the EBL to explain these three issues.

The letter wanted to know the matters on lending loans to two associate companies and to Super Oil Refinery. 

The explanation offered by the EBL did not seem satisfactory to the central bank.

 

Nagad
Walton