Farmers Bank, a newcomer private bank, has become an aggressive lender while new other banks are struggling to get borrowers amid sluggish investment climate and political instability since their inception.
The Farmers Bank provided loans more than the total deposit it accumulated till October last year.
The advance-deposit ratio (ADR) of the bank stood at 101.72% in mid-October last year against the authorised ratio of 85%.
The central bank was concerned about the aggressive lending activities of the newcomer bank and decided to sit in a meeting with the bank soon.
The total loans of Farmers Bank stood at Tk726.61 crore against its total deposit of Tk714 crore, according to the Bangladesh Bank data.
The ADR of the bank was 8.64% in December 2013, with the total deposit and loan being over Tk12 crore and 1 crore respectively.
The Farmers Bank had started operating banking activities in the market since June 2013 with a paid up capital of Tk401 crore.
The chairman of the bank is Mohiuddin Khan Alamgir, also chairman of the Parliamentary Standing Committee on Public Accounts.
The new banks’ ADRs may cross the authorised limit as they are investing their fresh capital as well as deposits, said a senior executive of Bangladesh Bank.
On the other hand an investigation conducted by the Financial Intelligence and Customer Services Department of Bangladesh Bank has found some irregularities in loan disbursement of the Farmers Bank.
The bank has also been found approving loans without properly following credit formalities in some cases. Even in some cases, the bank provided loan without taking up-to-date CIB clearance, according to the BB source.
The bank maintained the interest rate of 14.53% on advances and 9.54% on deposits as of November last year.
Of the new banks, Midland Bank also lent beyond the ADR limit that reached 86.41% in October last year.
The total loans of the bank stood at Tk488 crore against its total deposit of Tk565 crore, according to the Bangladesh Bank data.
Madhumati Bank maintained the lowest ADR of 36.71% while other new banks maintained it around 65% to 70%.
The ADR of scam-hit BASIC Bank also crossed the authorised ratio, rising to over 87% in October last year compared to 78% in December 2013.
The bank disbursed a total loan of above Tk550 crore from January to November last year.
Of the other private commercial banks, AB, UCBL, Standard and One Bank crossed the authorised ADR limit in October last year.