BB removes Farmers Bank MD Shamim

The Bangladesh Bank on Tuesday removed the managing director and chief executive officer of scam-hit newly-established Farmers Bank, AKM Shamim, over unrelenting disbursement of loans despite a liquidity crisis.
The central bank move came only two weeks after the managing director of loan scam-hit new bank NRB Commercial Bank, Dewan Mujibur Rahman, also the chief executive officer, was removed.
Central bank spokesperson Subhankar Saha confirmed New Age that central bank governor Fazle Kabir sent the order for removal of Shamim to Farmers Bank Tuesday morning.
He said that Shamim was barred from serving any bank and non-bank financial institutions for the next three years. 
A Farmers Bank official said that new managing director of the bank was yet to be appointed. 
Earlier on November 26, the central bank notified Farmers Bank board to explain in seven days why Shamim would not be removed for irregularities in the bank according to Section 46 of the Bank Company Act.
Central bank standing committee headed by deputy governor Abu Hena Mohd Razee Hassan found Shamim’s explanations over irregularities unsatisfactory and later on December 13 summoned Shamim to appear before the standing committee for a final hearing.
Central bank officials said that Shamim was removed on two grounds — the bank management’s failure to manage liquidity and giving large loans violating the central bank order for giving no further loans because of its liquidity crisis.
The scam-hit bank board of directors underwent a major reshuffle soon after the Bangladesh Bank ordered the removal of its chairman Mohiuddin Khan Alamgir, a ruling Awami League lawmaker.
Mohammad Masud took the chairmanship while director Maruf Alam was made vice-chairman. The bank’s audit committee chairman Md Mahabubul Haque Chisty also resigned along with Mohiuddin Alamgir on November 27.
The condition of the private bank, one of the nine new banks given licenses reportedly on political consideration, deteriorated in recent months after a huge amount of loans, given in violation of rules, became defaulted.
The bank, set up only four years ago, has been facing an acute liquidity crisis for the past few months because of rampant disbursement of loans, rising defaulted loans and failure to draw depositors. The bank’s defaulted loans stood at Tk 377.68 crore as of September 30, rising by Tk 100 crore in a year.
Central bank officials said that the huge amount of defaulted loans had resulted in a liquidity crisis in the bank and erosion of the depositors’ trust.
The bank has failed to draw deposits despite offering interest rates over 12 per cent against 4-8 per cent offered by other banks.
Earlier in November, the cash-strapped bank requested the central bank to give it Tk 300 crore in short-term loans as it was failing to continue its daily operations. It received Tk 96 crore from the central bank.
Farmers Bank earlier also failed twice to honour a Bangladesh Telecommunications Company Ltd cheque for Tk 35.44 crore because of fund shortage.
The central bank in January, 2016 appointed observer to the bank after finding violation of banking rules in sanctioning and disbursing loans and hiding defaulted loans amounting to about Tk 400 crore.
According to central bank inspection reports, Farmers Bank, which started banking operation on June 3, 2013, disbursed fresh loans in favour of defaulted clients collecting fake Credit Information Bureau reports and took over a number of loans from other banks breaching the banking rules.
Earlier on December 10, NRB Commercial Bank’s top management underwent major restructure over a number of loan scams including signature forgery, interference of outsiders and corruption.
The removal of the bank’s managing director also came in the wake of a number of loan scandals worth about Tk 701 crore in the bank, in which a number of directors of the bank and the then Mercantile Bank chairman Shahidul Ahsan were allegedly involved.

News Courtesy: www.newagebd.net