Awami League leader MK Alamgir resigns as chairman of troubled Farmers Bank

Awami League leader Muhiuddin Khan Alamgir has resigned as chairman of troubled Farmers Bank Limited.

Bangladesh Bank confirmed the resignation of Alamgir in a media statement on Monday.

It also said actions were taken against the bank's Managing Director AKM Shameem for his 'failure to perform duty and violating the central bank's orders'. 

The bank's director Mohammad Masud has been made chairman.

Besides Alamgir, Audit Committee Chairman Md Mahabubul Haque Chisty alias Babul Chisty has also resigned, according to the release.

It said the Executive Committee, Audit Committee and Risk Management Committee of the bank have been reformed.  

AKM Shameem

Mohammad Masud

On Sunday, Bangladesh Bank served a notice on the bank, asking why Managing Director Shameem would not be removed.   

According to the central bank, Farmers Bank has disbursed loans beyond the limit permitted in the regulations and much of it has turned into bad debt, creating a liquidity crisis.

The bank has failed to attract depositors. Moreover, existing depositors are increasingly opting to withdraw their funds.

As of September, the amount of the bank’s defaulted loans stood at Tk 3.77 billion or 7.45 percent of the total loans disbursed, according to data from Bangladesh Bank.

In a recent report, the government flagged the bank, hit by reckless lending and irregularities, as 'risky' for the financial sector.

According to the report on Farmers Bank, it loosened rules of disbursing loans and the internal control system soon after launch in 2013.

Bangladesh Bank appointed an observer for the bank last year after finding irregularities in disbursing loans of billions of taka only three years into operations, a move halted by the High Court later.

In the report, the finance ministry said the bank is taking loans with high interest rates from depositors and other banks while it does not have the capacity to repay.

The Farmers Bank has created 'systematic risk' for Bangladesh's entire financial sector in this way, according to the report.

A Bangladesh Bank official told bdnews24.com they accepted the names for the reformed board of directors of the Farmers Bank when former Sonali Bank MD Pradip Kumar Dutta, who was recently appointed an adviser to Farmers Bank, submitted the list on Monday afternoon.

The reformed board has assured the central bank of doing its best to improve the finances, according to the statement.

It says the central bank will continue monitoring the situation at the bank.

It also says the situation worsened recently as many of the depositors tried to withdraw their money following the allegations of irregularities.

It urged the depositors to continue their cooperation in the changed circumstances.

Alamgir's comment was not available immediately. Another person took the call when bdnews24.com phoned him on Monday night, but hung up saying it was a wrong number.

Before the Awami League leader, his wife was chairman at the bank. 

Alamgir, a former home minister and currently an MP from Chandpur, is chairman of the parliamentary standing committee on public accounts.

The former presidium member of the Awami League received the licence for the bank in 2013.

The government cleared licences for eight banks at the time. The awarding of the licences to the banks was a politically influenced move, Finance Minister AMA Muhith had earlier admitted.