Farmers Bank will not pay December salary to its officials and employees due to its persistent fund crisis as a result of bad governance and ice of irregularities in disbursement of loans.
“The bank is now in pitiable shape and faces a severe liquidly crisis. Even, it is now failing to pay back the depositors’ money. Such a situation has forced us to halt payment of salary to the officials and employees
in this month,” Azmat Rahman, Chairman of the Banks Executive Committee told The New Nation yesterday.
He said, the bank is now undergoing through an acute liquidity crisis as a result of eroding confidence of the depositors as well as unrelenting disbursement of loans by its former management. “The situation has also forced the bank to stop disbursement of fresh loans,” he said.
The scam-hit bank sought a deposit support amounting to Tk 300 crore from the central bank on November 9 to tackle its liquidity crisis, but was refused. “We’re trying to mobilize funds through various initiatives to overcome the current crisis,” Azmat Rahman said.
He further said that they had asked the bank’s officials to speed up recovery drives in their respective branches. We have also taken the initiative to mobilise funds by issuing a bond worth Tk 500 crore to meet up the bank’s liquidity crisis.
“All these initiatives are expected to yield good result and help overcome the fund crisis. Our officials and employees would be paid the salary as soon as the outstanding loans are recorded,” he added.
The bank has over 1,500 employees and officials. It had Tk 5 crore expenditure per month to the head of officials and employees salary. Farmers Bank board has recently undergone a major reshuffle. Mohammad Masud has been made its chairman replacing Mohiuddin Khan Alamgir, a ruling party lawmaker. Muhiuddin Khan Alamgir and Audit Committee Chairman Md Mahabubul Haque Chisty were forced to step down from the board in line with a BB directive to reconstitute the bank’s board. The central bank on Tuesday removed Farmers Bank Managing Director AKM Shamim for violating the banking laws and hampering the interests of the depositors.
As of September this year, Farmers Bank’s non-performing loans (NPLs) amounted to Tk 377.68 crore, up by around Tk 100 crore from a year ago. The bank’s NPL accounted for 7.45 per cent of the bank’s total outstanding loans.
Earlier this month, the commercial bank failed twice to honour a cheque of Tk 35.44 crore presented by Bangladesh Telecommunications Company Ltd due to fund shortage.
The state owned telecom firm got the money later.
A central bank report has recently mentioned that Farmers Bank did not have any capacity to pay back the depositor’s” fund.
Between September and November in 2015, the BB conducted special inspections at three branches of the Farmers Bank in the city’s Gulshan, Motijheel and Shyampur, and found gross violations of the banking rules in disbursing loans of around Tk 400 crore.
As of August, the bank’s total deposits amounted to Tk 5,170 crore and loan portfolio Tk 4,854 crore. The bank’s advance-deposit ratio has been above 85 percent for several months, which goes against central bank rule.
