Zafar Alam, a Chattogram-based ship breaker, borrowed from four banks to import ships for scrap in 2014. Instead, he used the money to upgrade his steel mill, breaching the credit terms in the first place.
Subsequently, the businessman defaulted on Tk300 crore as the investment failed to make his mill profitable.
Finding no other way out to retrieve the loans, two of the lenders – One Bank and Eastern Bank – have recently filed lawsuits with the money loan court (Artha Rin Adalat) against him.
At present, both the businessman's steel re-rolling mill and ship dismantling yard remain shut.
Zafar Alam has been running his steel factory named Super Steel since 1985. In the beginning, he had a partner in the business, but in 2000, he pulled out of the partnership and built his own Peninsula Steel Re-Rolling Mill – a venture to scrap ships and manufacture steel rods.
In 2014, after taking loans from the four banks, he invested in the rod making factory for its expansion.
Bankers said repayments were regular at the beginning, but the businessman has not paid instalments for the last three to four years.
In the meantime, Peninsula Steel Re-Rolling Mill has been out of production for nearly two years. The factory has been leased to a businessman in Dhaka. The Peninsula ship breaking yard has also remained shuttered for a long time.
On 28 October, One Bank filed a case against Peninsula Steel to recover Tk193 crore defaulted money. Zafar Alam, his wife Rasheda Zafar, brother Abu Alam and son Junaid Alam have been made defendants in the case.
One Bank officials said Peninsula Steel took out Tk100 crore from the bank in 2014 to import ships for scrap. But, the money was invested in the steel re-rolling mill, violating the credit term in the first place. Although the businessman's transaction with the bank was going smooth at the beginning, he has not been repaying the instalments for the last couple of years.
On 3 November, Eastern Bank's Agrabad branch filed the other case against Peninsula with the money loan court over Tk58 crore default loan.
Apart from these two banks, Peninsula owes Tk36 crore to Dhaka Bank and Tk10 crore to Bangladesh Commerce Bank.
Prices of mortgaged lands "too little"
On 19 December last year, One Bank put Peninsula's 2 acres of mortgaged land on auction. But the bank could not sell it as the bidding prices were "too little" to cover Tk193 crore.
Peninsula mortgaged 1 acre land to Dhaka Bank. Officials of the bank also said the value of the property is too little compared to the debt.
However, Bangladesh Commerce Bank thinks it would not be in trouble as the bank has "sufficient property" of the company mortgaged.
Mohammad Belal, senior assistant vice-president and head of the bank's Agrabad Branch, said, "Peninsula Steel owes Tk10 crore to us and we have its sufficient assets mortgaged to the bank. That is why we will not face any trouble in collecting the loan."
Peninsula Steel owner Zafar Alam could not be reached for comment despite repeated attempts.