4 SoBs may take over Tk 5,232cr Navana loans with 51 banks, NBFIs

HM Murtuza | Published: 21:53, Mar 18,2020


Troubled four state-owned banks have initiated moves to take over around Tk 5,232 crore in loans of 17 subsidiaries of Navana Group from 51 banks and non-bank financial institutions as the group is struggling to repay debts.

The initiatives of the banks, which are suffering from high non-performing loans, came following instruction of the finance ministry.

The SoBs which are going to take over Navana loans are Sonali, Rupali, Agrani and Janata.

The entities which issued credit to Navana Group include 32 banks and 19 NBFIs.

Finance minister AHM Mustafa Kamal has already held a meeting with top executives of the four state-owned banks to take over the loans of Navana Group’s subsidiaries from other banks and NBFIs.

Besides, the central bank is going to hold a meeting on March 24 this year with the banks which has financed Navana Group so far.

In the takeover process, Agrani Bank has been working as the lead bank and overseeing the entire process.

Agrani Bank managing director and chief executive officer Mohammad Shams-Ul Islam told New Age it would be similar to a bailout programme for Navana Group.

‘It’s not that the entire loans would be taken over by the four SoBs. We would take over a portion of those loans of Navana and the rest of the loans will remain with the existing banks,’ Shams-Ul said.

The banks may take over Tk 1,000 crore each of Navana Group’s loans with other banks and financial institutions, he said, adding that the issue was yet to be finalised.

‘We are waiting for the decision of the central bank and would work accordingly,’ he said.

‘The group had association with the country’s founding president Sheikh Mujibur Rahman,’ Shams-Ul said, adding, ‘The government can nurture a company also.’

Navana submitted the loan takeover proposal to the finance ministry in 2018.

Speaking about the reason for the takeover of Navana’s loans, Shams said that the group had sought some breathing space from the government.

Navana would squeeze its business and would float its shares on the stock exchanges, he said, adding that the entity wanted to make its business manageable by downsizing its business size.

Rupali Bank managing director and chief executive officer Obaidullah Al Masum told New Age that the bank was in the process of Navana Group’s loans takeover as per the instruction of Financial Institutions Division of the finance ministry.

The proposal may be placed before the bank’s board meeting scheduled to be held on March 23, Masum said.

Although the government has initiated to provide Navana Group a bailout with the state-owned banks’ fund, the SoBs themselves are struggling with a huge amount of defaulted loans.

Of the four banks, the amount of defaulted loans in Janata Bank is the highest, 29.15 per cent of its outstanding loans. The amount in Sonali Bank is 21.55 per cent, while in Rupali Bank and Agrani Bank 15.25 per cent and 14.56 per cent respectively.

Disbursement of such a huge amount of loans would also be a violation to the single borrower exposure limit as specified by the central bank in line with the Bank Companies Act, 2013.

Of the 17 subsidiary or associated companies of Navana Group, Navana Limited and Aftab Automobiles were named in the list of 8,238 defaulters, placed by the finance minister in parliament.

Of the existing loans of the group, Navana has highest Tk 510.72 crore in outstanding loans with Southeast Bank, Tk 442.18 crore with IFIC Bank, Tk 373.6 crore with The City Bank, Tk 365.42 crore with Agrani Bank, Tk 282.97 crore with NCC Bank, Tk 266.45 crore with Dutch-Bangla Bank, Tk 242 crore with One Bank, Tk 235.92 crore with Bank Asia, Tk 230.4 crore with Trust Bank, Tk 195.32 crore with Shahjalal Islami Bank, Tk 168.26 crore with NRB Bank, Tk 149.78 crore with Pubali Bank, Tk 142.74 crore with NRB Commercial Bank, Tk 137.2 crore with Premier Bank, Tk 132.53 crore with Uttara Bank, Tk 121.65 crore with Mercantile Bank, Tk 109.71 crore with Modhumoti Bank and Tk 100.21 crore with Dhaka Bank.

Besides, the associate entities has also Tk 92.9 crore in outstanding loans with Standard Bank, Tk 43.65 crore with Meghna Bank, Tk 38.3 crore with Union Bank, Tk 32.22 crore with Al-Arafah Islami Bank, Tk 32.12 crore with South Bangla Agriculture and Commerce Bank, Tk 31.99 crore with Mutual Trust Bank, Tk 28.04 crore with Social Islami Bank, Tk 27.17 crore with United Commercial Bank, Tk 21.61 crore with Padma Bank, Tk 19.39 crore with EXIM Bank, Tk 15.37 crore with Midland Bank, Tk 12.87 crore with BRAC Bank and Tk 8.51 crore with Prime Bank.

Apart from the associates’ loans with the banks, the entities have Tk 123.81 crore in outstanding loans with Uttara Finance and Investments, Tk 98.12 crore with Phoenix Finance and Investments, Tk 84.14 crore with GSP Finance Company, Tk 38.07 crore with Fareast Finance and Investment, Tk 33.04 crore with People›s Leasing and Financial Services, Tk 29.12 crore with Bangladesh Finance and Investments, Tk 24.31 crore with Premier Leasing and Finance, Tk 22.51 crore with CVC Finance, Tk 22.05 crore with Islamic Finance and Investment, Tk 20.97 crore with First Finance,  Tk 18.71 crore with Bay Leasing and Investments, Tk 17.96 crore with National Housing Finance and Investments, and Tk 17.91 crore with Midas Financing.

Besides, Navana Group’s subsidiaries have another Tk 7.15 crore in outstanding loans with IDLC Finance, Tk 5.81 crore with Meridian Finance and Investment, Tk 4.29 crore with FAS Finance and Investment, Tk 3.88 crore with International Leasing and Financial Services, Tk 2.07 crore with Prime Finance and Investment and Tk 0.87 crore with Lanka Bangla Finance.

As of September 30 last year, loans worth around Tk 66 crore of Navana Limited became defaulted while loans worth Tk 80 crore of Aftab Automobiles Limited turned defaulted.

A managing director of a scheduled bank said that Navana Group had been struggling to reply bank loans in recent times.

Despite making phone calls and visiting the Navana Group headquarters in the capital for comments, no official made any comment on the issue.

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