Farmers Bank wants to issue Tk 500cr bonds

Farmers Bank has sought permission from the central bank to issue bonds worth Tk. 500 crore to tide over a liquidity crisis. The bank’s new board of directors sought the permission at a meeting with Bangladesh Bank (BB) yesterday.

After the meeting, Atahar Uddin, a member of the bank's board of directors, told reporters about the request made to Bangladesh Bank. He said that farmers Bank would be proactive in trying to recover defaulted loans. “Bangladesh Bank has given us three months to recover from the crisis,” he added. Atahar Uddin said Farmers Bank also clarified to the BB the reasons for the removal of its managing director AKM Shamim. Earlier, the government had flagged Farmers Bank Limited, which has been hit by irregularities, as 'risky' for the financial sector of Bangladesh.

Bangladesh Bank appointed an observer for the bank last year after finding irregularities in the bank's disbursement of loans amounting to billions of taka barely three years after starting operations. But the move was stayed by the High Court (HC).

The finance ministry said the bank was taking loans at high interest rates from depositors and other banks while lacking the capacity to repay.

Farmers Bank had created a 'systematic risk' for the entire financial sector, the Bank and Financial Institutions Division (BFID) said in a report.

The bank's depositors may lose confidence in it because of many of its activities, the report warned.

The bank also admitted to the irregularities, the report mentioned.

Farmers Bank got its licence, along with eight other banks, in June 2013. The awarding of the licences to the banks was allegedly a politically influenced move.  According to the report on Farmers Bank, the bank relaxed its rules governing loan disbursement and internal control system soon after its launch in 2013. “The bank does not have the ability to repay its liabilities," it said.

As many as 28 of the 54 branches of Farmers Bank are making losses. The bank's cash reserve at the central bank was Tk. 300 million in September this year. The total deposit by its customers was Tk. 51.25 billion on that day.

Other banks deposited Tk. 5.35 billion in the bank and lent it Tk. 1.45 billion in the call money market.

Meanwhile, former home minister Dr Mohiuddin Khan Alamgir has resigned from his post as the chairman of the Farmers Bank Limited (FBL). Another member of the board of directors, Mahabubul Haque Chisti, has also resigned his post as the chairman of the FBL audit committee.

 

Farmers Bank wants to issue Tk 500cr bonds

Farmers Bank has sought permission from the central bank to issue bonds worth Tk. 500 crore to tide over a liquidity crisis. The banks new board of directors sought the permission at a meeting with Bangladesh Bank (BB) yesterday. After the meeting, Atahar Uddin, a member of the banks board of directors, told reporters about the request made to Bangladesh Bank. He said that farmers Bank would be proactive in trying to recover defaulted loans. Bangladesh Bank has given us three months to recover from the crisis, he added. Atahar Uddin said Farmers Bank also clarified to the BB the reasons for the removal of its managing director AKM Shamim. Earlier, the government had flagged Farmers Bank Limited, which has been hit by irregularities, as risky for the financial sector of Bangladesh. Bangladesh Bank appointed an observer for the bank last year after finding irregularities in the banks disbursement of loans amounting to billions of taka barely three years after starting operations. But the move was stayed by the High Court (HC). The finance ministry said the bank was taking loans at high interest rates from depositors and other banks while lacking the capacity to repay. Farmers Bank had created a systematic risk for the entire financial sector, the Bank and Financial Institutions Division (BFID) said in a report. The banks depositors may lose confidence in it because of many of its activities, the report warned. The bank also admitted to the irregularities, the report mentioned. Farmers Bank got its licence, along with eight other banks, in June 2013. The awarding of the licences to the banks was allegedly a politically influenced move. According to the report on Farmers Bank, the bank relaxed its rules governing loan disbursement and internal control system soon after its launch in 2013. The bank does not have the ability to repay its liabilities, it said. As many as 28 of the 54 branches of Farmers Bank are making losses. The banks cash reserve at the central bank was Tk. 300 million in September this year. The total deposit by its customers was Tk. 51.25 billion on that day. Other banks deposited Tk. 5.35 billion in the bank and lent it Tk. 1.45 billion in the call money market. Meanwhile, former home minister Dr Mohiuddin Khan Alamgir has resigned from his post as the chairman of the Farmers Bank Limited (FBL). Another member of the board of directors, Mahabubul Haque Chisti, has also resigned his post as the chairman of the FBL audit committee.