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Corruption, mismanagement

New boards for Farmers, NRBC Banks soon

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12th-Nov-2017       
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Kazi Zahidul Hasan  :
The central bank is set to dissolve the boards of directors of Farmers Bank and NRB Commercial Bank in line with the suggestions of a Parliamentary Standing Committee, sources said.
The Parliamentary Standing Committee on Finance earlier recommended the central bank for dissolving the Boards of the Directors of the banks on allegations of corruption and mismanagement.
 "Bangladesh Bank (BB) has already initiated the process of dissolving the banks' boards as per the directive of the parliamentary body," a senior BB official told The New Nation on Saturday on condition of anonymity.
He said, the BB will dissolve their boards in exercise of its regulatory power conferred on it in the Banking Company Act.   "Dissolution of boards is necessary to rescue the ailing banks and an announcement in this regard will be made by December," he added.
The BB official hinted that dissolution of the board might move toward along with removal of the top executives of both the banks.
In its 21st meeting, the Parliamentary Standing Committee on Finance expressed grave concern over the fast deteriorating financial health of the Farmers Bank and NRB Commercial (NRBC) Bank and asked the central bank 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 the central bank 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.
The BB official said, "We have launched 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.
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.
 "BB will reconstitute the boards to prevent the banks from bankruptcy and restore clients' confidence," he added.
He also said that the central bank has already appointed two of its senior officials as observers to the Boards of Directors of the banks to monitor and supervise their activities.
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.
The central bank has so far conducted 19 inspections on Farmers Bank.
Another report conducted by the Bank and Financial Institution Division (BFID) under the Finance Ministry termed the Farmers Bank, owned by former State Minister Mohiuddin Khan Alamgir, as 'risky' for the financial sector of Bangladesh.
In another investigation, the BB also found Tk 700 crore loan irregularities with NRBC Bank. The directors of the bank were involved in the massive irregularities in sanctioning the loans.
Regarding NRB Commercial Bank, the BFID report said it had prepared their Board meeting's minutes forging the signatures of absent Directors and disbursed credits to an organisation related to Mercantile Bank Chairman's interest.
In 2006, the central bank dissolved the Board of Oriental Bank, now ICB Islamic Bank Ltd, for corruption and mismanagement.

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