Staff Reporter :
Scam-hit Farmers Bank had maintained a high advance-deposit ratio (ADR) over the last couple of years after plunging into the bad patch of aggressive lending.
The ADR of the bank crossed the regulatory limit, rising over 105 per cent as on December 31 last year, according to Bangladesh Bank.
The bank disbursed a total loan of Tk 5151.41 crore last year against its total deposit of Tk 4449.57 crore, meaning it has lost the ability to pay the depositors back.
Of the total outstanding loan, over Tk 2,000 crore was provided to shady companies violating banking norms, according to Bangladesh Bank (BB). “Farmers Bank had provided more loans than its total deposit crossing the regulatory limit. It expanded credit to the market breaching the central bank rules relating to ADR,” a senior BB official told The New Nation yesterday, on condition of anonymity.
He said ADR of the bank went high to 105.24 per cent last year due mainly to aggressive lending practices.
The bank also maintained over 102 per cent ADR in 2015 and 2016.
As per the central bank rules, conventional commercial banks are not allowed to lend more than 85 per cent of their deposits.
“The Farmers Bank had started operating banking activities since June 2013. Just after the operation, the then board of the bank adopted an aggressive lending policy making the bank vulnerable,” said the BB official, adding, “It was maintaining a high ADR in the last three years despite warnings from the central bank.”
“The Farmers Bank has already turned insolvent forcing the depositors to approach for the central to get back their deposit. We have received complaints from the depositors as the bank refused to repay them.”
“My bank has already taken measures to bring down the ADR to permissible limit. The bank will also repay the money of depositors within the shortest possible time as it has already recovered a large amount from defaulters,” Md Ehsan Khasru, Managing director of Farmers Bank told The New Nation.
