Farmers Bank tagged ‘risky’ for financial sector

The Parliamentary Standing Committee on Finance Ministry yesterday asked the Bangladesh Bank to take punitive action against those involved in corruption and irregularities in running the Farmers Bank Limited and NRB Commercial Bank in line with the Bank Company Act. The central bank was also told to submit its report on the matter within next two months, according to a handout from Parliament Secretariat. Moreover, the committee asked the newly formed governing body of the Islami Bank Bangladesh Limited (IBBL) to inform about the details on loans it has been approving, its clients and the sectors, as the bank’s disbursement of credit have risen alarmingly in recent times. The parliamentary watchdog in its 21st meeting yesterday made the recommendation after discussing a report of the Bank and Financial Institutions Division (BFID) on the irregularities in these banks. The report termed the Farmers Bank, owned by former State Minister Mohiuddin Khan Alamgir, as ‘risky’ for the financial sector of Bangladesh. It said that the Bank was taking loans with high-interest rates from depositors and other banks while it does not have the capacity to pay back, creating ‘systematic risk’ for the entire financial sector of Bangladesh. The bank’s depositors might lose confidence in it for these activities, warned the BFID report submitted to the parliamentary standing committee yesterday morning. It also said that Farmers Bank was taking new loans violating a ban by the central bank, adding that the bank had also admitted to the irregularities. The Farmers Bank had secured its licence along with eight other banks in June 2013. Regarding NRB Commercial Bank, the report said it had prepared their board meeting’s minutes forging the signatures of absent directors and disbursed credits to an organisation related to Mercantile Bank chairman’s interest. Chairman of the parliamentary committee Abdur Razzak presided over yesterday’s meeting at Jatiya Sangsad Bhaban. It was also attended by State Minister for Finance and Planning MA Mannan, and committee members Najmul Hasan, Mostafizur Rahman Chowdhury, Farhad Hossain, M Shawkat Chowdhury and Akhter Jahan.