Kazi Zahidul Hasan :
Mohammad Elias Brothers Group (MEB) swamped in debt owing massive loans to a number of commercial banks.
As of August 2017, the accumulated outstanding loans of MEB Group stood at Tk 902.35 crore, according to Bangladesh Bank (BB).
The Chittagong-based business Group borrowed the money from 20 commercial banks and consequently failed to repay, BB officials said.
They said the Group managed such a high-volume of bank loan through ‘unimaginable’ favours from the bankers.
“A nexus between the bankers and sponsors of the profligate business group has made it possible to get such a huge amount of bank loan. At the end of the day, the Group failed to pay-back its loans turning the banks vulnerable,” a BB official told The New Nation on Friday preferring anonymity.
He added, “The debt of the Group has already turned into bad loans forcing the banks to write-offs them to clean-up their balance sheets”.
“This particular issue could be labeled as ‘reckless’ lending and borrowing. Not only MEB, a number of local corporate group already swamped in debt by managing loans from banks and financial institutions,” Dr Salehuddin Ahmed, a former BB governor, told The New Nation yesterday.
He said their debt (corporate group) also remains unpaid over the years and even they enjoy impunity across the political spectrum and in the banking industry.
“We should come out from the culture of ‘impunity’ to establish rule of law as well as restoring discipline in the banking industry,” said Dr Salehuddin Ahmed, adding, “The regulators should take serous action against the defaulters who borrowed large amount of money and did not repay.”
He also said the unpaid loans deprive economy of much-needed financing and harm banks’ future profitability.
MEB Group established in 1962 as a commodity trader by Mohammad Elias. Later, it set up textile, glass, plastics, paper, edible oil and food and beverage factories as part of its ‘aggressive’ business diversification plan.
Among the one and a half dozens of companies, only six are now in operations. The rest were closed because of financial crisis.
On August 10, Shamsul Alam, Managing Director of MEB Group, in a letter to the Senior Secretary of the Bank and Financial Institutions Division (BFID) sough the government help to resume operations of the Groups’ edible oil unit, which remained shut since 2011.
He, however, could not be reached for comments.
“The Group goes into default years back under its aggressive business decisions. Such decisions took a serious toll on its business operation as well as profitability. As a result, a number of companies under the Group suffered huge financial losses sending it to financial difficulty,” a Chief Executive Officer (CEO) of a private commercial bank, told The New Nation, asking not to be named.
His bank is one of the lenders from which MEB Group had borrowed.
“Their debt has been piled-up due to non-payment of loans. We’ve already written-offs their loan to clean up the bank’s sheet,” the CEO said.
