MRS.

SILVIA CASE
Analysis of the environment of the situation: Mrs. Silvia was very active in making liaison with bank officials and political persons and other relevant high profile influential persons. Mr. and Mrs. Sing (Mrs. Silvia) started doing well in their business and their business was quite profitable with very good export performance. Their repayment behavior was not bad in the preliminary stage. Thus they managed to build a good reputation in the banking circle. They used their business reputation, personal links with influential persons from banks and political channels for getting loans from the bank. It was a about tk=3,00,00,000.00 (three crore) altogether. Because of their reputation past behavior with the bank and recommendations, transaction profile, and policy of encouraging foreign entrepreneurs bank was very liberal and lenient in the process of sanctioning loan, and not much formalities was followed that are being followed for a normal local entrepreneur. A property was mortgaged by Mrs. Silvia for the loans. That property was Mrs. Silvias father and he leased the property for 3 year period in his daughters name. The title of the property was not transferred to Mrs. Silvia. Problem started to arise after couple of years when unexpectedly Mr. and Mrs. Sing found absconding. The amount of outstanding was almost tk=4,50,00,000.00 adjusting the bank liabilities. Main issue of the problem: The main issue of the problem is the recovery of such a huge amount of loan. All communications attempted by the bank ended with no result and response. Mrs. Silvia do not have any property in her own name. The only property mortgaged to the bank was Mrs. (four crore fifty lacs). Finally Mr. and Mrs. Sing left the country without

Silvias father. The title of ownership never transferred to Mrs. Silvia. Her relations in Dhaka declined the bank in the recovery process was making it more hard to recover such a huge amount of loan. Therefore the big question is how to recover the investment. Main actors in connection with the problem: Bank is first actor in connection with the problem, who is concerned to recover the loan. Mrs. Silvia is the opposite party, it seems that she is not willing to repay any amount of loans. Main Causes or determinants of the problem: The main causes of the problem are: Bank officials sanctioned such a huge amount of loan without following necessary formalities and proper inspection. Mrs. Silvia seems not willing to adjust the bank liabilities. Mrs. Silvia managed to leave the country without adjusting the bank liabilities. Mrs. Silvia does not have any property in her own name in the local country. The title of the mortgaged property belongs to Mrs. Silvias father. Bank is unable to make any communication with the Mr. and Mrs. Sing. Mrs. Silvias relations in Dhaka refused to help the concerned banks in the recovery process. Alternative solutions of the problem: Finding alternative solutions for such a case requires good experience in the banking operations. However as a student of Bank Management I managed to find out the following ways to solve the problem:

 Making a Money suit for the mortgaged property to recover the loan. Bank can gradually show the loan as bad debts. Recommendation: Bank will send legal notices to the Loan taker, according to the situation the notice will not be replied therefore next I think bank should go for the money suit under the Money Loan Court Act 2003, for recovery of the loan and notices to be published in the national daily news papers, about the legal actions being taken by the bank. If Mrs. Silvia still does not reply then, Court will proceed according to Law, issue arrest warrant, and croaking warrant empowered for acquisition or public auction or open sale by bidding of any Mr. or Mrs. Silvias assets available or guarantors (if any) assets. Bank can also go for suit under section 420 in the Chief Metropolitan Magistrate, Court Dhaka for cheating. This court will also issue arrest warrant. After getting decree bank will pursue to the Ministry of Home Affairs for taking legal actions. Ministry of Home Affairs then request the Ministry of Foreign Affairs to take necessary steps. Mrs. Silvia must had Bangladeshi passport, through the passport number it will be easy to find where she is living now. Then Embassy office in that country will communicate with the concerned Ministry, to reach Mrs. Silvia. If bank can reach her through legal channels, Mrs. Silvia might encourage in settling the issue and adjusting the liabilities with the bank. Now, bank also has the option to sell out the mortgaged property of Mrs. Silvias father. Therefore, bank can recover if not full at least some of the loan amount. I think this is the best possible way for recovery of the loan.

There are disadvantages of this process as well, these are, Whole process is costly. Time consuming, might take years to get the decree from the court and execute the reward. As the bank did not maintained the formalities in sanctioning the loan, it might be difficult to present before the Learned Court enough evidences and documents but not impossible. Recently The Government of Bangladesh has been able to recover a huge amount of money from Arafat Rahman Cocos accout, from the foreign bank. Therefore, though tough I think taking Legal Actions will provide the best chances to the bank for recovery of the loan.

HAMID TEXTILE MILLS LTD CASE

Analysis of the environment of the situation: Mr. Hamid belongs to a very reach family, he studied and served in London for about 20years, recognizes that his family and social profile is quite rich. He formed a company and came to the bank for loan. Bank after studying the papers and investigating sanctioned tk=20 lac loan to the company. But the Company failed miserably and therefore was not able to pay the installments. Gradually the loan amount accumulated to tk=120 lacs. In such situation borrower company gave a proposal to the bank for rehabilitation of the project in expectation to run operations profitably. Bank approved the proposal, the assets of the company is mortgaged to the bank as security of loan amount. But The Company failed to make profit, and still the companys performance is below the break even. Under

this situation the company failed to keep its commitment, and the loan amount increased to tk=340 lac. Main issue of the problem: The main issue of the problem is the recovery of such a huge amount of loan. The Company has not been able repay the loan installments. The project is found to be as a loss project. Companys liability is getting higher day by day. Bank is planning to take legal actions against the borrowing company, so the main concern is how to recover the amount. Main actors in connection with the problem: Mr. Hamid Mr. Hamids family members as a owners of Hamid Textile Mills ltd. Hamid Textile Mills Ltd. Main Causes or determinants of the problem: Managerial incapability. Resource stringency Over capitalization towards eventual creation of in-operative assets. Site selection was not appropriate in consideration with the nature of the firm. Delay in implementation due to shortage of equity. Inadequate monitoring by the Bank. Delay in implementation due lack of vision. Alternative solutions of the problem: Taking Legal Actions. Rescheduling the loan and installments.

 Participating in managerial decision making process to make the firm profitable, through experienced personnel. Increase the monitoring by the bank. Recommendation: At first bank should increase its monitoring over the overall activities of the company. If it does not work then they should try to reschedule the loan with the company, so that the investment could be recovered in the view of the overall industry is profitable and in growth stage, therefore proper policy and decision making, could make the Company profitable. At last but not the least, if these things dont work, then the Bank should move to the Court and take Legal Actions for recovery of the loan.