Troubled Union Bank PLC is facing potential legal action from the revenue authority after failing to pay Tk150 crore in tax despite repeated reminders.
The bank’s pay orders for the amount, issued to Tax Zone 1, were dishonoured, prompting the tax office to send a letter to the bank’s managing director yesterday. The letter warned that a case would be filed under the Negotiable Instruments Act if the dues were not cleared by 31 December.
Officials from the NBR Income Tax Department told The Business Standard (TBS) that the law stipulates a maximum penalty of one year in prison, a fine of up to three times the amount due, or both, in such cases.
The letter, seen by TBS, also instructed the bank’s MD or other senior officials to appear at the tax office by 31 December to explain why legal action or fines should not be imposed.
Income Tax Zone 1 Commissioner Md Lutful Azeem confirmed to TBS that the letter was issued, stating, “The bank owes us approximately Tk180 crore in TDS [tax deducted at source]. Although they issued separate pay orders totalling Tk150 crore, the amount hasn’t been deposited due to their liquidity crisis.”
“We’ve heard that Bangladesh Bank has provided liquidity support to some struggling banks. However, they haven’t disclosed whether they received any funds, nor have they cleared the outstanding dues to us,” he added.
TBS made several attempts to contact the bank’s MD by phone but was unable to reach him.
The Union Bank was among a bunch of banks controlled by the S Alam Group during the previous Awami League government, which was ousted from power in early August this year. The controversial Chattogram-based conglomerate allegedly withdrew a large sum of money from the bank in unjustified loans, leading to a liquidity crisis.
In late November, the central bank extended liquidity support to struggling banks, amounting to over Tk22,000 crore, with Union Bank receiving a portion of this support. However, despite the assistance, the bank has allegedly failed to settle its tax liabilities.
The letter sent to Union Bank’s MD stated, “If you [or other representatives] do not show up for the hearing or fail to provide a satisfactory explanation for the delay, legal action will be taken as well as fines will be imposed.”
According to tax regulations, TDS payments are due within two weeks of the following month. Union Bank has not made any payments since last July.
After the fall of the Awami League government, significant financial irregularities surfaced in several groups, including S Alam, which had close ties to the previous government.
As a result, banks controlled by the S Alam — such as Union Bank, Islami Bank, First Security Islami Bank, Social Islami Bank, and Bangladesh Commerce Bank — faced difficulties. Other affected institutions include Padma Bank and Exim Bank.
In total, 12 financial institutions, including seven banks, owe approximately Tk800 crore in taxes to Tax Zone 1, and notices have already been sent to these institutions, according to the tax office.
Commissioner Lutful Azeem, however, said that Islami Bank, First Security Islami Bank, and Exim Bank have started making tax payments. Among the remaining banks, Padma Bank and National Bank, along with Union Bank, are unable to pay their dues.
Husne Ara Shikha, the new spokesperson of the central bank, told TBS, “All banks have received liquidity support. So, why Union Bank is unable to pay the money, I cannot say.”
She added, “Union Bank has been repeatedly instructed to pay the tax dues.”
According to several NBR officials, no case has ever been filed against any bank under the Negotiable Instruments Act for dishonouring a pay order of income tax. If a case is filed against Union Bank, it would be the first instance of such legal action against any bank for this issue. tbsnews.net
