Bangladesh climate change fund stuck in troubled Farmers Bank

The Ministry of Environment and Forests is in trouble after it failed to draw Tk 5.08 billion of the climate fund from the troubled Farmers Bank where it had perked the money.

Environment and Forests Minister Anisul Islam Mahmud told parliament on Tuesday that his ministry had informed the finance ministry about the portion of the Bangladesh Climate Change Trust fund getting stuck in the bank.   

The bank has been bedevilled by several types of irregularities, especially in loan release since its establishment by ruling Awami League MP and former minister Muhiuddin Khan Alamgir four years ago.

Alamgir resigned recently as Farmers Bank chairman after facing allegation that the bank has disbursed loans beyond the limit permitted by the rules and much of it has turned into bad debt, creating a liquidity crisis.

He is the chairman of the parliamentary committee on public accounts now.

The latest cabinet shuffle earlier in January saw opposition Jatiya Party leader Anisul and Jatiya Party (JP) leader Anwar Hossain Manju swap ministries of environment and water resources.

In response to a question from Salim Uddin MP in parliament, Anisul said the ministry had deposited more than Tk 5.08 billion of the climate change fund in one-year fixed deposit accounts at different branches of the Farmers Bank in Dhaka.

The bank was offering the maximum rate of interest on the deposit at the time, Anisul noted.     

The terms of the accounts with over Tk 4.55 billion have expired and the ministry had reminded the bank several times to cash the fixed deposits, the minister said.

“But the bank has said it cannot cash the FDRs now due to liquidity crisis,” he said.    
  
The Bangladesh Bank had not responded to the Farmers Bank’s letter seeking Tk 3 billion cash injection.

Recently, the central bank provided the Farmers Bank with Tk 960 million through repo.

The Farmers Bank secured its licence along with eight other banks in June 2013 in a politically influenced move.

In a report in October last year, the government said the Farmers Bank has created 'systematic risk' for Bangladesh's entire financial sector by taking loans with high interest rates from depositors and other banks while it does not have the capacity to repay.

The bank failed to attract depositors and existing depositors are increasingly opting to withdraw their funds.

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

Between March and June this year, the bank only recovered Tk 70 million in loans. The bank's top 10 defaulters alone owe Tk 1.34 billion.