The Union Bank Scandal

Written By: Reshma Haque

In a recent audit, the Bangladesh Bank found several significant inconsistencies in the Union Bank’s loan issuance. According to Prothom Alo, it was discovered that more than 300 firms with simply a paper existence had received the majority of the private commercial bank’s overall disbursement in loans. In certain circumstances, not even the corporations themselves have business licenses. The Union Bank has not reported the loans to be classified, according to the BB report, despite failing to seemingly recover the funds. The central bank discovered a difference of Tk 190 million earlier this year in a vault at the capital’s Gulshan branch of Union Bank. However, for unspecified reasons, none of the regulatory bodies, including Bangladesh Bank, have penalized the bank for the occurrence. According to its annual report for 2021, Union Bank’s funding cost is 8.9% while its loan rate is 9%. In spite of incurring significant funding costs from interest revenue, the bank posted a net profit of Tk 870 million in 2021 compared to Tk 980 million the year before. So, the question of how the bank is profitable after giving depositors 8.9% interest arose.

Featured Image Courtesy: Bangladeshi Bank


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