Dhaka, Bangladesh (BBN) – The Bangladesh Bank has issued a show cause notice against the Managing Director and CEO of the Farmers Bank Ltd AKM Shameem asking him to explain why he will not be removed from his post.
The central bank of Bangladesh issued the show cause notice on Sunday.
The notice asked Mr Shameem to explain his positive within seven working days.
“We have issued the show cause notice against the MD of the Farmers Bank in line with the existing Banking Companies Act,” a BB senior official told the BBN on Monday.
The MD will have to explain two issues – about the ongoing liquidity problem of the bank and the fresh loan disbursement despite imposition of an embargo by the central bank.
The Bangladesh Bank’s initiative came against the backdrop of higher credit growth than deposit that has created liquidity problem of the fourth generation private commercial bank.
As of August last, the bank’s total deposits amounted to BDT 51.70 billion and loan portfolio BDT 48.54 billion.
The bank’s advance-deposit ratio, generally known as ADR, has been crossed 85 percent for several months, which goes against central bank rule.
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.
Besides, rising trend of withdrawing pressure on deposits following some media reports has also pushed down liquidity flow of the bank in the recent days, according to the industry insiders.