Despite regulations prohibiting loans to defaulters or those exceeding single-borrower limits, Janata Bank is set to grant new loans to Beximco Group, one of its top defaulters. This move comes after Bangladesh Bank exempted Janata Bank from two critical provisions of the Banking Companies Act on December 12, following consultations with the government. According to Section 27(ka) of the 1991 Act, loans cannot be extended to defaulters, and Section 26(b) restricts loans to a maximum of 25% of a bank’s paid-up capital. However, the central bank invoked Section 121, which allows exceptions in “economic necessity.”

The decision was reportedly made to address labor issues at Beximco Industrial Park, where Janata Bank’s financial aid will cover workers’ salaries for the next three months. Critics argue this undermines financial discipline, as Beximco owes Janata Bank over Tk 23,328 crore, all classified as defaulted.

Janata Bank’s financial condition has significantly deteriorated, with a staggering 61.39% of its total loans, or Tk 60,489 crore, in default as of September 2024. The bank has also sought Tk 20,000 crore in liquidity support from the government and Bangladesh Bank, reflecting its dire state. Its capital shortfall has risen to Tk 33,921 crore, and projected defaults are expected to reach Tk 68,000 crore by year-end.

Once a leading institution supporting successful entrepreneurs, Janata Bank has been plagued by mismanagement and fraudulent practices over the last 15 years, leading to its current liquidity crisis. Industry observers criticize the recurring exemptions for politically connected conglomerates like Beximco, which they claim erodes accountability and fairness in Bangladesh’s banking sector.