Farmers Bank MD AKM Shameem

Dhaka, Bangladesh (BBN) – Bangladesh Bank (BB) on Tuesday removed the Farmers Bank’s Managing Director (MD) and Chief Executive Officer (CEO) AKM Shameem on charge of his alleged liquidity crunch and loan disbursement bypassing its embargo.

The central bank has removed the Farmers Bank’s MD with imposing a bar from taking employment directly or indirectly at any banks for a period of three years, a BB senior official told the BBN in Dhaka immediately after the sending of the removal order.

The central bank has already sent the order to the authorities concerned of the Farmers Bank Limited for taking necessary action in this connection, he added.

BB Governor Fazle Kabir has issued the order as per recommendations of the central bank standing committee.

The central bank of Bangladesh earlier had formed a four-member standing committee, headed by its Deputy Governor Abu Hena Mohd Razee Hassan, to hear the MD’s representations regarding his alleged loan disbursement bypassing its embargo and liquidity problem of the private commercial bank.

Earlier on November 26, the central bank issued a show-cause notice in line with the existing Banking Companies Act against the MD of the FBL asking him to explain why he should not be removed.

In the notice, the MD had been instructed to explain two issues: the ongoing liquidity problem of the bank and the fresh loan disbursement despite imposition of an embargo by the central bank.

The BB’s action came against the backdrop of higher credit growth than deposit that threw the new bank into liquidity crunch.

The FBL’s advances-deposit ratio — generally known as ADR — has crossed 85 percent for several months, which contravenes central bank’s rules, according to the BB officials.

The central bank of Bangladesh had earlier set the safe limit of ADR at 85 percent for conventional banks and at 90 percent for sharia-based Islamic banks.

On the other hand, a special inspection of the problem-ridden private commercial bank has been continued to assess its real financial health, after heads rolled over a crisis of the trouble-hit fourth-generation bank.

Two of the branches — Gulshan and Motijheel — along with the FBL’s headquarters, have already been investigated by the central bank inspectors.

The inspectors are now scrutinising the assets quality of the bank, the sources confirmed.

They also said the inspection report is likely to be submitted to the authorities concerned by the end of next week.

On 27 November, the board of directors of the FBL was restructured with the election of a new chairman and a vice-chairman of the bank.

Mohammad Masud and Maruf Alam have been elected chairman and vice-chairman respectively of the private bank.

On the same day, ruling Bangladesh Awami League MP Dr. Muhiuddin Khan Alamgir, also a former minister, resigned as the FBL chairman. The bank’s audit-committee chairman and director, Mahabubul Haque Chisty (Babul Chisty), also relinquished his position.

The central bank appointed an observer to the FBL on January 13, 2017 for improving its financial health through strengthening monitoring and supervision of the bank’s operations.