Scam-tainted Farmers Bank is renamed Padma Bank

Dogged by irregularities, the Farmers Bank has been rechristened as Padma Bank in a desperate makeover after the Bangladesh Bank endorsed a proposal.

The board of directors of the bank, which is reeling under allegations irregularities and loan scams, recently sent the proposal to the central bank.

The financial sector regulator announced the approval in a circular on Wednesday, saying it replaced ‘The Farmers Bank Limited’ with ‘Padma Bank Limited’ on the list of all scheduled banks from Tuesday.

According to a government report on the Farmers Bank, it loosened rules of disbursing loans and its internal control system soon after it was established by ruling Awami League MP Muhiuddin Khan Alamgir in 2013.

The irregularities identified in the report included not following guidelines to disburse loans, giving loans to organisations that actually do not exist and to its directors and directors of other banks violating rules, giving loans against insufficient or faulty guarantees and giving a borrower more amount than the ceiling.

The government report said the Farmers Bank situation put Bangladesh’s entire financial sector at risk.

Alamgir resigned from the bank as its chairman following pressure by the end of last year.

Mahabubul Haque Chisty alias Babul Chisty, a former chairman of the bank’s audit committee, has been arrested by the Anti-Corruption Commission over a loan scam involving the bank.

Former finance minister AMA Muhith blamed the founders of the bank for its troubles.

The Investment Corporation of Bangladesh or ICB and four government banks - Sonali, Janata, Agrani and Rupali - bought majority share of the troubled bank recently in a desperate effort to save it.