‘The bank’s application will be placed before the BB board scheduled today’
Farmers Bank has finally confessed that it had committed loan irregularities and pleaded with Bangladesh Bank to spare it from paying the penalty of Tk10 lakh.
The bank has recently sent a letter of appology to the central bank, stating that it has in line with the BB’s instruction corrected the loan amount of Tk38.26 crore disbursed to six institutions.
Earlier, the bank marked the amount as investment, violating rules. As the bank complied with the instruction of Bangladesh Bank, the bank should be freed from the penalty, reads the letter.
The BB has decided to place the Farmers Bank’s appeal before its board meeting scheduled today.
“The bank’s application will be placed before the board for consideration as the governor has no authority to forgive,” said a senior executive of BB.
Earlier on January 11, the bank filed a writ with the High Court against the penalty imposed by the central bank which drew a huge criticism from every corner.
Farmers Bank is the first bank that went to the court against the central bank’s action. BB also moved to the court to defend its action and got verdict in its favour.
An investigation carried out by the central bank found that the bank marked its loans of Tk38.26 crore as investment.
The loans were given to six institutions including EBL Securities, International Securities, Prime Islami Securities, Kazi Equities, BD Securities and Union Capital.
But loans and investment were totally different according to the bank company law which states that no loans can be shown as investment.
The bank concealed the loans as it failed to bring down the credit-deposit rate to an acceptable level within a certain period set by the BB.
On January 20 of 2015, the central bank asked the bank to stop aggressive lending by bringing down its credit-deposit rate to 85% by March of the year and gradually between 70% and 75%.
The bank failed to achieve the credit-deposit target and transferred the loans of Tk38.26 crore to investment segment on June 29 last year, violating rules.