A bank may be robbed in two ways. The first one is crude. Taking anything of value from the bank by force, threat of force or by causing its officials to fear for their life and safety.
The other option is sophisticated, which is to cause undue pressure on a bank's management to grant a huge amount of loan against dubious mortgages.
In Bangladesh, those who have the capacity to apply the second option do not need to rob a bank with guns. With backoffice machinations, they secure the loans and then become willful defaulters. The bank is deprived of the capital and interest of the loan, and it is helpless to recover the money from the powerful defaulters.
What happened to Exim Bank Managing Director Mohammed Haider Ali Miah and Additional MD Mohammad Firoz Hossain appears to be a combination of both the ways to rob the bank by two directors of Sikder Group though the efforts seem to have failed.
The story reads like a badly written film script. The two bank officials, Haider Ali and Firoz Hossain, were called in on May 7 to inspect a mortgaged property against a Tk. 500 crore loan sought by the Sikder Group, a business conglomerate that has investments, among others, in garment, power plants, port operations, and operations of economic zones in the southern region.
After due diligence, the bank officials had reported that the mortgage value of the property was less than the required collateral. Thus thwarted, two directors of the Sikder Group became furious. They allegedly tried to kill the Exim Bank's two top officials by shooting at them for refusing to appraise the directors' mortgaged property at a higher value for the loan. They also allegedly tortured them, confined them at a house in Banani and forced them to sign a white paper, according to a case filed by the bank authorities with the Gulshan Police Station.
Now that a case has been filed in this regard, the law will take its own course.
But the unprecedented incident left another ominous scar on the banking sector already ailing by loan scams and bad governance caused by mainly political interference.
This unprecedented incident took place at a time when the government has been looking at the banks in the banking sector to salvage the economy devastated by the Covid-19 pandemic. This may leave a negative impact on the government's efforts to ensure cash flow into businesses from the banking sector.
In the last one decade, several state run banks were robbed in a quiet manner. Basic, Sonali and Janata banks were robbed in sophisticated ways. A private bank, Farmers Bank, was the worst victim to the loan scam and later was renamed to continue in business.
This happened due to mainly undue interference on the bank management to grant huge sums of loans for unscrupulous businessmen's dubious businesses in collusion of some bank officials. The robbed banks have yet to recover from their financial damages. Some of the accused engaged in those sophisticated bank robberies are now behind bars while others are enjoying life free as birds.
The scams contributed to the rise of default loans that stand at more than Tk2 lakh crore according to an IMF report.
Today, the main problem for the ailing banking sector is a lack of good governance. Failure to take stern actions against these wilful defaulters and loan scammers keep the culture of impunity alive and well and embolden subsequent misappropriation from the banks.
It is because of the bad governance and unrestrained scams people have largely lost confidence in the banking sector. Nothing can be more alarming than this trend. It is because banks depend on people for deposits that constitute their capital for business.
And it is a sacred duty of a bank to act prudently to grant any loan as the amount of the money it loans out to a business is money owned by the depositors from the cross section of citizens. So a bank can not act on whims.
But in the present culture of impunity that has held the banking sector hostage, it is difficult for a bank management to thwart undue interference and act prudently to grant a loan if it is sought by any businessman enjoying the blessings of powerful political lobbies. The two top officials of Exim Bank have become the latest example and fell victim to this ominous culture. What the two directors of the Sikder Group have done to them is just a manifestation of the present culture.
The Sikder Group is an alleged habitual beneficiary of this culture. They took a loan of Tk335cr from the National Bank that is run by the group owners. The bank released the loan without completing the mortgage procedure of the land offered as collateral. In an investigation, Bangladesh Bank found anomalies in loan disbursement. The case is under investigation by the Anti- Corruption Commission.
Out of curiosity, I checked this morning the 'awards and achievements' section of the Exim Bank website to see if the bank has received any formal recognition for its work.
The website shows the bank has achieved several prestigious national and international awards for what it says "quality management, good governance and excellence in services".
With a smiling face, its Managing Director Mohammed Haider Ali Miah is seen receiving the awards at home and abroad. He has, of course, played the leading role in achieving the recognition for his bank.
Today, he is also a victim to the violence for carrying out his duty as the leader of the bank.
He is not alone the victim of this terror. It's a slap on the face of the country's banking sector too.