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Shocking Credit Card Debt: NBL Apologies Not Enough

National Bank Limited has apologized to Bangladesh Bank for granting unprecedented amounts of credit card loans to its directors and their relatives in breach of rules.

“This type of mischief will not happen again in the future,” NBL promised in a letter sent to the central bank on January 12.

In gross breach of banking rules, NBL let 11 people including its two directors Rick Haque Sikder and Ron Haque Sikder and their family members spend the staggering sum of $13.63 million (about Tk 118 crore) using international credit cards from 2017 to 2021.

NBL also promised to operate its card division with utmost caution, asking Bangladesh Bank not to suspend its card operations.

The letter was written in response to BB’s show cause notice which asked NBL in December last year to explain why its card operations should not be stopped or suspended.

According to BB rules, a Bangladeshi citizen cannot spend more than $12,000 per year outside the country using his credit card. During the aforementioned years, the 11 people were legally allowed to spend $660,000 (about Tk 5.66 crore) on their credit cards.

Nine of the 11 are family members of former NBL chairman Zainul Haque Sikder, and the other two are senior Sikder Group executives, according to a central bank investigation last year.

The NBL cleared the 11 people to flout the rules on the instruction of Zainul, who died on February 10 last year, according to the report.

BB last month fined NBL Tk 55 lakh for trying to hide the loan details of the 11 people.

The NBL’s letter to BB said the former had stopped the operation of the 11 people’s credit cards.

NBL has so far distributed about 90,000 credit cards and 1 lakh debit cards to its customers.

The total outstanding loans taken by credit card holders are now between Tk 125 crore and Tk 130 crore.

NBL has also urged BB not to revoke the authorized dealer licenses of its Dilkusha and West Dhanmondi branches.

The central bank’s investigation found that the NBL was operating a foreign exchange account for ZH Sikder Women’s Medical College in violation of the rules.

The account was opened with the NBL branch in Dilkusha which was later transferred to the West Dhanmondi branch in violation of the 2018 foreign exchange guidelines.

“NBL will face turmoil if the licenses of the two branches are revoked,” the letter read, adding that the cancellation of the licenses will also subsequently create a liquidity crisis amid a “negative campaign” from the media.

Asked why the 11 people were allowed to flout the rules, NBL chief executive Md Mehmood Husain said he could not comment on the matter as he joined the bank only two months ago .

Apologies were offered for mistakes made in the past, he added.

BB officials told this correspondent that the central bank would not accept the apology and action would be taken in accordance with banking law.

The central bank will do what is appropriate after reviewing the letter, BB spokesman Serajul Islam said.

A central bank official said NBL was a reputable bank before the Sikder family took over the bank.

Zainul Haque Sikder and his family members began to expand their influence on the board after 2009, infesting the bank with malfeasance.

Zainul was president of NBL for 12 consecutive years. His widow Monowara Sikder is now president while their sons Rick, Ron and daughter Parveen Haque Sikder serve on the 12-member board.

After detecting gross violations related to the disbursement of loans, the BB requested the NBL in April last year to refrain from disbursing any loan without its prior approval.

The bank was granted permission to resume service in December last year.

NBL loan defaults stood at Tk 4,592 crore in September last year, up 120% from December 2020. The bank’s non-performing loans were just Tk 388 crore in September last year. 2009. The Bank’s profits also fell significantly last year.