A director of Mercantile Bank has taken illegal financial advantage from the bank in a way which the central bank says is a criminal offence.
A special inspection by Bangladesh Bank into the private bank's Agrabad branch in Chittagong unearthed the irregularities.
Md Shahabuddin Alam, the director, issued cheques and drew Tk 126.72 crore from the branch in the name of his company SA Oil Refinery Ltd between March 4-October 3, 2012 according to a BB report.
The cheques were encashed on the same day they were issued and the branch maintained its daily ledger by preparing fake documents, the report said.
The BB also said the amount that was withdrawn by the company did not result in any income to the bank.
However, Mercantile Bank's documents showed that pay orders were issued from the Agrabad branch favouring the sister concerns of SA Group of Industries in the morning of the day of transaction against placement of cheques (mostly drawn on SND account of SA Oil Refinery Ltd) irrespective of sufficient credit balance in the account.
A special notice deposit (SND) account is an interest bearing deposit account, for a short period of time. However, a seven-day notice is required if the customer wishes to withdraw money from this account, according to Mercantile Bank's website.
A total of 1,519 pay orders were issued in 2011-2012 amounting to Tk 1,854.18 crore from the branch in favour of different sister concerns of SA Group of Industries in the same manner.
In January this year, the BB in a letter to the managing director of Mercantile Bank said corruption had been taking place in the branch and the central bank was not informed that the director has a loan account with the branch.
On the basis of the letter, the chief executive of the bank asked the manager of the branch, Nanda Dulal Bhattacharjee, to explain the matter.
In reply, the branch manager who is also an executive vice president said the director took "the advantage on almost all of the managers of Chittagong city area since long by doing the above mentioned irregular transactions in his business account(s) under compelling situation."
The director was all along a member of the executive committee and once he was the chairman of the executive committee of the board of directors.
"Being the only director and local guardian of the bank in Chittagong, normally all postings, promotions, transfer of executives and officers were made on his recommendations for which all of us were giving due attention to his satisfaction," Bhattacharjee said in his reply.
"Moreover, all the business proposals of Chittagong would require his recommendation for which no manager would like to dissatisfy him for their performance and progress in the service," the branch manager added.
The Daily Star attempted several times to reach the director by phone, but he did not take calls.