The central bank also asked the Farmers Bank authorities to explain why Shameem should not be removed from office within 7 days.
The Bangladesh Bank has instructed the management of Farmers Bank Ltd (FBL) to remove its incumbent Managing Director AKM Shameem.
In the letter sent on Sunday, the central bank also asked the Farmers Bank authorities to explain, under Section 46 of the Bank Company Act, why Shameem should not be removed from office within seven days.
FBL’s finances started deteriorating soon after it was established in 2013. In January last year, the central bank appointed an observer in the bank’s board to ensure it was adhering to the Bank Company Act while disbursing loans and improving risk management and internal control.
A national daily reported in 2015 that the Bangladesh Bank had conducted special inspections at three FBL branches and found gross violation of banking rules in disbursing loans of about Tk400 crore.
On October 29 this year, the Parliamentary Standing Committee on the Ministry of Finance expressed serious concerns over the deteriorating condition of the bank.
According to a central bank report submitted to the committee, 13 counts of irregularities were found, including disbursement of loans to non-existent companies.
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The report also revealed the fact that the bank disbursed loans to its own directors as well as those of other banks, violating the credit discipline.
Right after this news broke, state-owned Bangladesh Telecommunications Company Ltd (BTCL) tried to pull out its fund from the bank, but only to discover that their cheques, amounting to Tk35.44 crore, had bounced twice.