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High-degree corruption, ACC probe likely

Farmers, NRBC banks heading to bankruptcy!

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31st-Oct-2017       
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Special Correspondent :
The Anti-Corruption Commission (ACC) is likely to launch a probe into the alleged loan scandal and corruption of Farmers Bank and NRB Commercial (NRBC) Bank.
"The issue has come to ACC's knowledge through media reports and being the country's anti-graft body it is contemplating launching of an investigation into their financial irregularities and graft," an official of the Commission told The New Nation on Monday, asking not to be named.
On Sunday, the Parliamentary Standing Committee on the Finance Ministry expressed grave concern over the fast deteriorating financial health of the Farmers Bank and NRB Commercial (NRBC) Bank and asked Bangladesh Bank ((BB) to initiate probe into the banks' financial irregularities and corruption afresh.
The central bank has been asked to submit the probe report to the parliamentary committee by December this year.
If necessary, the committee also suggested for reconstitution of the board of directors of the two commercial banks.
The committee recommended for exemplary punishment to those who will be found involved in the irregularities to restore clients' confidence and salvage the banks from possible bankruptcy.  It came up with the recommendations at its 21st meeting at Jatiya Sangsad Bhaban presided over by its chairman Dr. Abdur Razzak. "We will launch fresh investigation on the banks to follow the committee's decision. Stern action will be taken against the perpetrators who helped swindle money from the banks," BB spokesperson Shbhankar Saha told The New Nation yesterday.
He said both the private commercial banks are now at a risk of bankruptcy. They have already become insolvent due to operational inefficiency and rampant corruption. The boards of the two banks cannot evade the responsibility for the current state of the banks.
"If necessary, the BB will reconstitute the boards to prevent the bank's from bankruptcy and restore client's confidence," said Shuvankar Saha. 
Earlier, the BB appointed its senior officials as observers to the boards of directors of the banks in the wake of deteriorating financial health of the banks following large loan-scams.
Muhiuddin Khan Alamgir, MP, Chairman of Farmers Bank and former Home Minister and Farasath Ali, a businessman and Chairmen of NRBC Bank, could not be reached for comments. Both of them were asked to remain present before the parliamentary committee on Sunday but they did not attend.
BB earlier found Tk 400 crore loan irregularities at the Farmers Bank's Gulshan, Motijheel and Shyampur branches while conducting special inspections after reports of misappropriation of funds by a vested group.
"The Farmers Bank is now operating its business by taking loans from other banks due to deteriorating financial health. The situation of the bank is so bad that it does not have the capacity to pay liabilities. Even it is taking deposit at a high interest rate further risking the bank," according to a BB report.
It added that Farmers Bank has been suffering from an acute liquidity crisis for the last one year. The bank has been failing to preserve cash reserve requirement (CRR) and statutory liquidity ratio (SLR) in line with the central bank's regulation.
As per the latest data, the bank has so far mobilized Tk 5,125 crore deposits from its clients while the interbank deposit stood at Tk 535 crore. It took Tk 145 crore loan from call money market, had Tk 30 crore cash reserve in BB and held Tk 1,009 crore in government securities. As of June this year, Farmers Bank has disbursed Tk 4,820.90 crore loans meaning the bank's does not have the capacity to repay liabilities.
The net loss of the bank stood at Tk 13.11 crore as of June 2017 and 28 out of its total 54 branches are incurring loss.
The central has so far conducted 19 inspections on Farmers Bank. In another investigation, the BB also found Tk 700 crore loan irregularities at NRBC Bank. The directors of the bank were involved in the massive irregularities in sanctioning the loans.

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