Weeks after the government in Tajikistan announced an ambitious bond issue to help finance a bailout for several struggling banks, prosecutors have decided to start investigating the lenders, according to EurasiaNet.org.
The four banks being audited by the General Prosecutor’s Office are Tojik Sodirot Bonk (TSB), Agroinvestbank, Tojprombank and state-owned Amonatbonk (Tajikistan’s savings bank).
Another troubled lender, Fononbank, is reportedly being spared the treatment because it was already audited last year over suspicions that it was somehow collaborating with the banned Islamic Revival Party of Tajikistan (IRPT).
RFE/RL’s Tajikistan service, locally known as Radio Ozodi, reported that checks on the four banks are set to last six months. A representative for the General Prosecutor’s Office, Hotam Nazarzoda, said that the operation was being carried out at the request of the government to establish that the lenders were not being “mismanaged.”
Prosecutors have refrained from explaining quite what they mean by “mismanagement” or why this should be a matter for them to investigate.
But one unidentified source told Radio Ozodi this was primarily a reference to the way in which the banks issue loans. The source explained that some banks have been known to accept doors, windows, cows and other livestock as collateral for credit, immaterial of whether the customer was ever likely to be able to repay their debt. This sort of liberal credit-giving has, in the opinion of the authorities, led to lenders being driven to the verge of collapse.
“Animals have the habit of dying, and sometimes they do it early. And there have been cases when an apartment worth $50,000 could be displayed as being worth $100,000. This is called unguaranteed collateral,” the source told Radio Ozodi.
According to official figures from the end of 2016, the four banks under inspection hold around $350 million of unguaranteed credit.
The banks under investigations last year experienced severe problems in providing account-holders with their own savings. The shortage of hard cash also meant that banks servicing salaries — often for government departments — were unable to pay the intended recipients.
The government’s solution to the cash flow crisis was to issue bonds to the tune of around $490 million, which then went toward covering the more than $500 million cost of recapitalizing the banks.
TSB got 2.25 billion somoni ($284 million at current exchange rates); Agroinvestbank 1.7 billion somoni ($215 million); Tojprombank 450 million somoni ($56 million); and Fononbank a relatively meager 80 million somoni ($10 million).
