Ansar VDP Bank accused of misusing BDT 1,000 crore agricultural fund
Ansar VDP Bank has reportedly misused a major agricultural loan fund provided by Bangladesh Bank by channeling the money into other sectors. Central bank inspections revealed that only a fraction of the BDT 1,000 crore fund was actually distributed for agricultural purposes.
DHAKA, BANGLADESH — In a significant financial discrepancy uncovered by regulatory authorities, Ansar VDP Bank has been found to have misused a substantial BDT 1,000 crore agricultural loan fund provided by Bangladesh Bank. The central bank had originally established this substantial financial arrangement under a state guarantee to ensure the provision of low-interest agricultural loans specifically intended for members of the Ansar and Village Defense Party, an organization representing approximately 6.1 million individuals.
According to the official terms established between the financial institutions, Bangladesh Bank provided the BDT 1,000 crore fund at a modest 4 percent interest rate. In turn, Ansar VDP Bank was expected to extend these crucial financial resources to its members at an 8 percent interest rate. However, a comprehensive inspection conducted by Bangladesh Bank revealed a starkly different reality regarding the actual disbursement and utilization of the capital.
The central bank inspection specifically uncovered that as of June 30, 2023, the actual agricultural loan balance originating from this dedicated fund did not exceed BDT 350 crore. Rather than directing the capital toward the designated agricultural sector, the banking institution distributed the money into entirely different sectors while charging high interest rates. This practice directly contradicted the foundational agreements and operational guidelines governing the state-guaranteed financial package.
Addressing the severity of the regulatory breach, Arif Hossain Khan emphasized the strict parameters governing such central bank allocations. He stated that pre-financed funds must be distributed exclusively to the specific sector for which they were authorized, noting that taking funds under the name of one sector and utilizing them in another is entirely impermissible. He further described the action as a direct violation of the conditions set by Bangladesh Bank and confirmed that appropriate measures would be taken against those involved in accordance with established rules.
Following the discovery of these irregularities, Bangladesh Bank took formal administrative action by sending an official letter to Ansar VDP Bank on August 16. The central bank has formally demanded comprehensive statements of affairs covering the operational period from December 2021 through June 2023. This regulatory scrutiny comes even as the government previously extended the state guarantee period for these agricultural loans to August 15, 2029, prompting Bangladesh Bank to extend the overall tenure of the fund accordingly.
