Staff Reporter :
Bangladesh Bank (BB) has cleared the way of buying shares of Farmers Bank by four state-owned banks and Investment Corporation of Bangladesh (ICB) in exercise of power conferred upon it vide Section 121 of the Bank Company Act, 1991.
BB also granted exemption to the banks and ICB from compliance of Section 14 Ka, 26Ka and 23 (1) (Ka) of Bank Company Act, 1991, paving the way for their managing directors and chief executives to become directors of Farmers Bank. All the scheduled commercial banks in the country have also been provided exemption of compliance from Section 7 (3) of the Bank Company Act, 1991 (Amended up to 2013) to provide security custodial service without forming a subsidiary, with effect from July 22 this year.
Banking Regulation and Policy Department (BRPD) of BB on Tuesday issued two separate circulars in this regard, signed by the Governor Dr Fazle Kabir.
Officials said the circulars eliminated the legal barriers to the share acquisition of Farmers Bank by four state-owned banks (Sonali, Janata, Agrani and Rupali) and ICB and ensured their representation in the board of the Farmers Bank.
They will buy about 60 percent shares worth Tk 1,100 crore from the bank, which was given the licence on political consideration.
The bank is now struggling to survive due to loan irregularities involving over Tk 1,000 crore.
In a special inspection between September and November 2015, the central bank found gross violations of banking rules in disbursing loans by Farmer Bank management.
The BB found some of the bank’s former directors, including its then Chairman Muhiuddin Khan Alamgir, also an Awami League MP, and then Audit Committee Chairman Mahabubul Haque Chisty, involved in sanctioning those loans.
The two were later forced to quit following BB’s pressure.
