Defaulters thrive on bank loans but unwilling to repay

Riding on bank loans, they have been going from strength to strength – their businesses expanded, and they bought land, flats, SUVs and whatnot. Yet, these wilful defaulters are unwilling to repay their debt obligations.

Banks resorted to court to retrieve their money, but lengthy judicial procedures got in the way and threw spanners on their efforts, allowing defaulters to bask in. 

Bankers say such tendency of not repaying loans by businesses has had a negative impact on Chattogram's banking industry.

Take Shah Amin Group, engaged in motor parts and refuelling businesses, for example - it had taken out Tk125 crore from Islami Bank's Chaktai branch at different times since 2007 for its three business entities – Shah Aminullah Lubricants and Grease Industries, Shah Amin Ullah Oil Agencies and Shah Amin Ullah Filling Station.

Ahmed Nabi Chowdhury, owner of the group, stopped paying back to the bank in the last few years although his business has been going great guns. His repayments in the initial years went well.

Having failed to get back its money even after a long time, Islami Bank eventually lodged a case with Artha Rin Adalat (money loan court) against Shah Aminullah Lubricants and Grease Industries to recover Tk67.61 crore defaulted by it. The group now owes Tk165 crore plus in interests to the bank.

Aman Ullah, senior assistant vice-president and head of Chaktai branch of Islami Bank, said Shah Amin Group has not been repaying the bank for a long time even though its business in motor parts and filling stations is going well.

They earlier filed 21 cases against Shah Amin Group under the Negotiable Instrument Act, he added.

Ahmed Nabi Chowdhury, chairman of Shah Amin Group, said, "We are trying to get our loans rescheduled through negotiation so that we can pay back."

Ahad Trading, another Chattogram-based company, has not been repaying loans for a long time, though the company has expanded its business with bank loans over the years since 2005 – it now imports wheat, edible oil and spices though it started with only sugar.

Md Abul Bashar, owner of the company, now owes Tk136 crore to the National Bank and around Tk74 crore to the Prime Bank.

Bank officials say Abul Bashar, an importer of wheat, sugar, edible oil and spices, has been expanding his business size with each passing year. He bought land in prime locations of the port city, such as Patia, Anowara and Raozan and also built a community centre in the city's Kalamia Bazar area. But he is dilly-dallying to repay bank loans. 

Abul Bashar said, "I could not repay loans because of losses in my business. I now regularly communicate with the two banks. I hope that the matter will be resolved soon if bank officials concerned cooperate."

In another example of a wilful defaulter, Mabia Steel was set up with the help of bank loans by two brothers – Jahangir and Farid from Sitakunda area, owes around Tk500 crore to different banks and non-bank financial institutions for a long time. But the company has not paid back a single penny to them.  

Likewise, GK Steel, which has been involved in the steel business in Chattogram for a long time, defaulted on Tk75 crore it took from two branches of the National Bank to increase its business volume.

Officials at the bank say GK Steel took the loans to import raw materials for making SS and MS pipes. It continued to pay loan instalments initially. But it has not stopped repayments for the last four-five years despite registering good businesses.

Another defaulter business entity, S&M Trading Company, a subsidiary of Jainab Trading, has taken out bank loans at different times to import consumer goods since 2008.

Two brothers – Ahmed Abdullah and Mahmud Abdullah – who operate the business that is officially named after their mother Ruhina Khanam – have not yet paid a single penny even though over a decade went past since they took a loan from Bank Asia. Their liability to the bank now stands at Tk41 crore.

The group also owes around Tk85 crore to Al Arafah Islami Bank, Tk95 crore to Uttara Bank.

Its business office named Jainab Tower is located in Khatunganj, a consumer goods market. The company's owners also own 15-20 multi-storied buildings in different parts of the port city.

Ahmed Abdullah said, "We could not repay bank loans because we suffered a huge loss in our consumer goods business. We are now trying to reschedule the loans."

Super Six Star Corporation, a shipbreaking company, owes around Tk144 to five banks.

In 1994, six friends ventured into shipbreaking business, but at the beginning, three of them pulled out. 

The remaining three partners – Mozahar Hossain, Shamsul Alam and Yusuf – continued with the business that thrived on bank loans over the next two decades, but they did not pay back the loans.  The company closed down - none of them now wants to pay off liabilities. 

The company defaulted on Tk60 crore from Janata Bank Laldighi branch, around Tk49 crore from Social Islami Bank, Tk21 crore from Eastern Bank, Tk6 crore from Prime Bank and Tk8 crore from Southeast Bank.

The three owners are now engaged in different businesses – Mozaher runs Zahid and Brothers' auction business, Shamsul has a business named Alam Steel, while Yusuf has a business of old ship cables that is currently run by his son.

Syed Mahmud Akther, senior executive vice-president and head of corporate (Chattogram) at Mutual Trust Bank, said not returning bank loans is very unethical despite running business successfully for a long time.

To recover loans, banks file cases against such defaulters but they manage to get away because of lengthy court proceedings, he added.