Bangladesh Bank on Tuesday waived three provisions of the bank company act for allowing four state-run commercial banks (SCBs) to inject Tk 660 crore as equity into the scam-hit Farmers Bank and go into the bank’s board.
BB took the move under the government initiative to revive the Farmers Bank that has been suffering from intense liquidity crisis followed by distrust of its customers because of loan scams.
Under the move, Sonali, Janata, Agrani and Rupali would purchase shares worth Tk 165 crore each of Farmers Bank totaling Tk 660 crore, while the Investment Corporation of Bangladesh would purchase Tk 55 crore shares of the entity.
A BB order issued by its governor Fazle Kabir said that Sonali, Janata, Agrani and Rupali banks were exempted from complying section 14 (a) and 26 (a) under section 121 of Bank Company Act, 1991 allowing the bank to invest into the Farmers Bank.
BB also waived 23(1) (a) of the act allowing managing directors/directors of the four state run banks be appointed as the director of Farmers Bank. BB officials said that as an NBFI, ICB could directly invest in the Farmers Bank and hold director post of any bank.
Following by huge irregularities by the owners of the bank, Farmers has gone through reshuffle in last few months with the ouster of its former chairman Muhiuddin Khan Alamgir, an Awami League lawmaker, and ex-chairman of its executive committee Mahabubul Haque Chisty. Two director of the bank also resigned after the BB asked them to quit over their alleged involvement in loan scams.
Deposit in the bank stands at around Tk 4,449 crore against Tk 5,151 crore loans, reflecting sorrow state of the entity with almost no cash in the bank’s coffer.
A number of depositors have filed complaints with the central bank after the sinking bank failed to repay them Tk 852 crore of deposits. Due to cash crunch, Farmers Bank has been failing to keep mandatory provisioning.
Finance minister AMA Muhith, however, for a number of occasions have stated that he would take initiative so that the bank keeps running. But his move to inject money from the state-run bank has been criticised by banking experts who recommended for merging the troubled bank with other banks.
- Courtesy: NewAge / May 08, 2018
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