Farmers Bank MD AKM Shameem
Dhaka, Bangladesh (BBN)- The central bank of Bangladesh on Wednesday grilled Managing Director and Chief Executive Officer of the Farmers Bank Limited (FBL) AKM Shameem on charge of his alleged liquidity crunch and loan disbursement bypassing its embargo.
A standing committee of the Bangladesh Bank (BB) interrogated Mr. Shameem in a personal hearing held at the central bank headquarters on the day, according to the BB officials.
The four-member committee, headed by BB Deputy Governor Abu Hena Mohd Razee Hassan, is expected to submit its report with a recommendation to the governor shortly whether Mr. Shameem will be removed or not, he added.
Sources, however, said the FBL MD and CEO submitted his clarifications on the issues in a written form at the hearing.
Earlier on November 26 last, the central bank issued a show-cause notice in line with the existing Banking Companies Act against the MD and CEO of the FBL asking him to explain why he should not be removed.
The timeline for explanation was seven working days.
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 latest 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 per cent 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 per cent for conventional banks and at 90 per cent 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 scrutinizing 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.
Earlier on 27 November last, 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.
BBN/SSR/AD