The central bank has brought The Farmers Bank Limited under strict surveillance following irregularities relating to Tk 4 billion in the bank.
Published : 13 Jan 2016, 08:26 PM
Bangladesh Bank has appointed an observer to the bank launched just two and a half years ago with former home minister Awami League MP Mahiuddin Khan Alamgir as the main sponsor.
The central bank's Banking Regulation and Policy Department sent a letter to the commercial bank’s chairman and the company secretary informing them of the appointment.
Alamgir is the chairman of the bank's 21-member board of directors, having replaced his wife.
The letter said central bank General Manager ANM Abul Kashem will act as the observer.
Bangladesh Bank said it had taken the move to improve Farmer Bank’s ‘internal management’ and bring discipline.
Deputy Governor Abu Hena Mohd Razee Hassan told bdnews24.com, “In its investigations, Bangladesh Bank found irregularities in the bank’s internal management and loan disbursement.”
“The observer has been appointed based on (the investigations),” he added.
Central bank spokesperson Executive Director Subhankar Saha told bdnews24.com, “Bangladesh Bank appoints an observer to a bank when that bank requires improvement in internal control, management, and risk and credit management.”
From now on, the Farmers Bank will have to send to the observer its agenda and other documents before every meeting of the directors.
Bangladesh Bank had earlier appointed observers to several other commercial banks.
Farmers Bank, which secured its licence in June, 2013, along with eight other banks, is operating 38 branches.
An official of the central bank’s banking regulation department said, “Huge irregularities have taken place in Farmers Bank. Loans have been disbursed in dubious names.”
He said investigators had found irregularities in the disbursement of loans amounting to around Tk 4 billion in the last three years.
An inspection team of the central bank held the bank’s Managing Director Choudhury Moshtaq Ahmed, Additional Managing Director AKM Shameem, and Executive Committee Chairman Md Mahabubul Haque Chisty (Babul Chisty) responsible for the irregularities.
Mohd Athar Uddin is the vice-chairman of the bank while Chowdhury Nafeez Sarafat heads the Audit Committee.
According to Bangladesh Bank, deposits with Farmers Bank were Tk 34.59 billion on Dec 10 last year, when loan figure reached Tk 24.14 billion.
The bank achieved 165 percent growth in credit disbursement year-on-year against an average 13.22 percent growth in the entire sector.
A member of the inspection team, speaking to bdnews24.com on condition of anonymity, said, “The bank’s Gulshan, Motijheel, and Shyampur branches forwarded loan applications to the head office without any scrutiny.”
“And those applications were granted,” he added.