Union Bank PLC is under mounting pressure as the revenue authority gears up for potential legal action over Tk150 crore in unpaid taxes, a debt the troubled bank has failed to address despite repeated reminders stated in a report.
The controversy escalated when the bank’s pay orders issued to Tax Zone 1 were dishonored. In response, the tax office sent a stern letter to Union Bank’s managing director on Monday, warning of legal proceedings under the Negotiable Instruments Act if the dues remain unpaid by 31 December. The letter also demanded the MD or senior officials appear in person to explain why penalties should not be imposed.
The law prescribes severe consequences for such violations, including a maximum one-year prison sentence, fines up to three times the owed amount, or both. Officials from the NBR Income Tax Department hinted at the seriousness of the situation, stating that this could mark the first time a bank faces legal action for dishonored tax pay orders.
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Union Bank, once closely tied to the controversial S Alam Group during the Awami League’s tenure, has been embroiled in financial turmoil. Allegations of unjustified loans and fund mismanagement by the Chattogram-based conglomerate have left the bank in a liquidity crisis. Despite receiving part of a Tk22,000 crore liquidity support package from the central bank last month, Union Bank has not cleared its tax liabilities, with TDS payments overdue since July.
The aftermath of the Awami League’s ouster in August unveiled significant irregularities in several institutions linked to S Alam Group, including Islami Bank, First Security Islami Bank, and Social Islami Bank. Tax Zone 1 has revealed that these banks, along with Padma Bank and National Bank, owe a collective Tk800 crore in taxes (aproximately). While some banks – Islami Bank, First Security Islami Bank, and Exim bank have begun payments, Union Bank along with Padma Bank and National Bank remain defaulters.
Union Bank’s failure to act could set a precedent, with officials contemplating legal action under a rarely invoked provision. If pursued, this would be the first such case against a bank for dishonored pay orders related to income tax.
Repeated attempts by The Business Standard to contact Union Bank’s MD went unanswered, leaving the bank’s next move shrouded in uncertainty. As the 31 December deadline looms, all eyes are on Union Bank to see whether it complies or faces unprecedented legal consequences.
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