Janata Bank is under trouble as some of its large borrowers whose loans were restructured under a special policy of the central bank are not paying installments regularly.

The state lender restructured the highest amount of credits among the banks since Bangladesh Bank introduced a separate loan restructuring policy for big defaulters worth Tk 500 crore or more in 2015.

Eleven corporate groups have availed the facilities. Of them, seven are the clients of Janata Bank. The seven clients are: Beximco, Jamuna, Thermax, SA Group, BR Spinning, AnnonTex and Ratanpur.

The total restructured loan stood at Tk 14,400 crore, of which 35 percent or Tk 5,000 crore were regularised by Janata Bank.

SA Group, BR Spinning and Ratanpur Group have failed to continue paying installments.

The three groups owe over Tk 800 crore to Janata Bank. These business groups had sought further extension of the special treatment, including a cut in interest rate and an increase in grace period. But BB has declined to entertain the requests.

The three groups had a total loan of over Tk 2,300 crore regularised by various banks. Of them, SA group has had loan of over Tk 900 crore restructured, BR Spinning over Tk 570 crore and Ratanpur over Tk 800 crore, according to BB data.

Of the seven groups, BR Spining and Ratanpur have already become defaulters as they did not pay installments on time, said Abdus Salam, managing director of Janata Bank.

He said the grace period of BR Spinning was extended, but it still has failed to pay installments. The group is preparing to file a writ with the High Court so the default status is stayed.

“It is a big problem for the banking sector as defaulters are filing writ petitions against their default status to take fresh loan. As a result banks cannot take actions or reject their loan proposals,” he said.

Salam said SA Group has paid a small portion of the loans.

“We have already served notice to these groups to pay installments regularly,” he said.

The Janata CEO said it is not that these business groups which are not paying installments regularly are really in bad shape; rather they think they may be able to get the preferential treatment again.

Maksudur Rahman, managing director of Ratanpur Group, said the company has requested the central bank to reduce the installment amount. 

“The installment amount is too high for us to pay regularly. But still we have continued to pay the installment.”

Rahman said banks were supposed to lend to the large borrowers to enable them to run businesses smoothly but the lenders did not do it. “As a result we have not been able to expand our business, which has made us defaulter again,” he added. 

Among the seven business groups, Beximco is the largest client of Janata Bank with the conglomerate has had Tk 1,800 crore of loans restructured.

Under the central bank's restructuring policy, different banks have restructured over Tk 4,800 crore of loans of Beximco.

Some other banks are also in trouble after restructuring large loans as the borrowers do not repay their loans regularly. Some borrowers are paying some money only to keep their loans regular, said a senior executive of a private bank.

The banking sector regularised loans amounting to Tk 113,775 crore from July 2013 to December 2015. Of the amount, Tk 82,392 crore was rescheduled and Tk 31,383 crore restructured.

Of the rescheduled amount, Tk 30,000 crore was regularised taking advantage of the relaxed policy while Tk 52,244 crore in compliance with the rescheduling policy.

According to BB, the recovery of the rescheduled loans under the relaxed policy is unsatisfactory.

The recovery rate of the loans regularised under the special policy was only 11.48 percent while it was 31.50 percent for the loans rescheduled under the existing policy, according to BB.

Of the total rescheduled amount, 17.33 percent or Tk 5,116 crore were default loans.

The central bank relaxed its loan rescheduling policy in December 2013 to help businesses overcome losses inflicted by political turmoil. Though the policy expired in June 2014, the central bank continued to allow the rescheduling until December of the year in the face of pressure from influential business people.