Bangladesh Bank moves to remove Farmers Bank’s MD

The central bank has taken an initial step to remove the top official of the Farmers Bank as it landed in severe troubles.

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

The bank’s authorities have been told to respond within seven days, according to the letter seen by bdnews24.com.

Shameem, however, claims the notice sought explanations over the bank’s liquidity crisis.

AKM Shameem. File photo

“The Bangladesh Bank has just sought some explanations in line with the Section 42 of Banking Companies Act,” he told bdnews24.com on Monday.

“The bank is facing a liquidity crisis. Bangladesh Bank wants an explanation. It sought explanations over the rising liquidity crisis and management failure.”

The notice, however, refers to the law’s Section 42, which says the central bank can remove top officials, if it deems necessary for the wellbeing of the lender.

The law requires serving notice before removing an official.

The board of Farmers Bank, formed in 2013, is headed by Awami League leader and former minister Muhiuddin Khan Alamgir.

According to the central bank, the bank has disbursed loans beyond the permitted limit 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 bank’s defaults have stood at Tk 3.77 billion, 7.45 percent of the total loans disbursed, according to data from Bangladesh Bank.