National Bank Limited has apologised to Bangladesh Bank for extending unprecedented amounts of credit card loans to its directors and their relatives violating the rules.
"This type of misdeed will not happen in the future," NBL promised in a letter sent to the central bank on January 12.
In a serious breach of banking rules, NBL let 11 individuals, including its two directors Rick Haque Sikder and Ron Haque Sikder and their family members, spend a staggering $13.63 million (about Tk 118 crore) using international credit cards from 2017-2021.
NBL also promised to operate its card division with utmost caution, requesting Bangladesh Bank not to suspend its card operations
The letter was written in response to BB's show-cause notice that 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 any more than $12,000 in a year outside the country using their credit card. In the aforementioned years, the 11 individuals were legally allowed to spend $660,000 (about Tk 5.66 crore) on their credit cards.
Nine of the 11 individuals are the family members of former NBL chairman Zainul Haque Sikder, and the two others are top executives of Sikder Group, according to a central bank probe last year.
NBL allowed the 11 individuals to flout the rules at the instruction of Zainul, who died on February 10 last year, the report said.
BB last month fined NBL Tk 55 lakh for trying to hide the loan-related information of the 11 individuals.
The NBL letter to BB said the formerhad stopped the operation of the credit cards of the 11 people.
NBL has so far distributed around 90,000 credit cards and 1 lakh debit cards to its clients.
The total outstanding loan taken by the credit card holders now stands between Tk 125 crore and Tk 130 crore.
NBL also urged BB not to cancel the authorised dealership licences of its Dilkusha and West Dhanmondi branches.
The central bank probe found the NBL operated a foreign currency account for ZH Sikder Women's Medical College breaching the rules.
The account was opened with NBL's Dilkusha branch, which was later transferred to the West Dhanmondi branch, violating the guidelines for foreign exchange transactions 2018.
"NBL will face turmoil if the licences for the two branches are annulled," the letter read, adding that cancellation of licences will also subsequently create a liquidity crisis amid a "negative campaign" by the media.
Asked why the 11 individuals were allowed to flout the rules, NBL Managing Director Md Mehmood Husain said he could not comment on the matter because he joined the bank only two months ago.
The apology was offered for mistakes made in the past, he added.
BB officials told this correspondent that the central bank would not accept the apology and that action would be taken as per the banking law.
The central bank will do what is appropriate after reviewing the letter, said BB spokesperson Serajul Islam.
A central bank official said NBL used to be a reputed bank before the Sikder family took over the bank.
Zainul Haque Sikder and his family members started to widen their influence in the board after 2009, plaguing the bank with malpractices.
Zainul served as the chairman of NBL for 12 years in a row. His widow Monowara Sikder is now the chairman while their sons Rick, Ron, and daughter Parveen Haque Sikder are members of the 12-member board of directors.
After detecting gross violations related to loan disbursement, the BB asked NBL in April last year to refrain from disbursing any loan without its prior approval.
The bank got permission to resume the service in December last year.
NBL's default loans stood at Tk 4,592 crore in September last year, up 120 percent from December 2020. Non-performing loans at the bank was only Tk 388 crore in 2009. The Bank's profit also significantly reduced last year.