Failure to Pay FDR: Climate Trust threatens to sue Padma Bank
The Bangladesh Climate Trust Fund (BCTF) has warned Padma Bank of legal action over its failure to pay back the fixed deposit receipt (FDR) worth Tk 29.1 crore upon maturity.
The FDR had matured on May 25, and despite sending a letter to the troubled bank on May 20 of legal action if the amount was not returned on its date of maturity, no pay order came through.
"We will go for legal action," Mashud Ahmed, managing director of BCTF, told The Daily Star yesterday.
In 2016, the government agency had deposited about Tk 508 crore with the bank, then known as Farmers Bank, in the form of one-year FDRs at varying interest rates.
But due to acute cash crunch, the bank had failed to return the sum then, too.
While a major portion has been recovered since then after the bank's liquidity position propped up following the onboarding of five state-owned financial institutions as shareholders of the then-Farmers Bank in 2018, the bank also renewed some of the FDRs at favourable rates, said an official of BCTF on condition of anonymity as he is not authorised to speak with media.
The BCTF still has Tk 71.6 crore tied in the form of FDRs with the bank, which was renamed Padma Bank in 2019 in an attempt to get an image makeover. Of the sum, Tk 29.1 crore became overdue after May 25.
The BCTF provides salary and wages to its employees from the interest segments of its FDRs kept with different banks, it said in the letter to Padma Bank on May 20, which was also forwarded to the central bank and the ministries of environment, forest, and climate change.
The Daily Star has a copy of the letter.
"The bank has not repaid any interest last year against the FDRs," Ahmed said.
Contacted, Md Ehsan Khasru, managing director of Padma Bank, said the bank officials would sit with the BCTF today to resolve the issue.
He declined to comment further on the issue.
Established in 2013, the bank became a hotbed for financial irregularities within less than three years of operation. More than Tk 3,500 crore was siphoned out from the bank between 2013 and 2017, found a Bangladesh Bank investigation.
When allegations of corruption against Muhiuddin Khan Alamgir and Md Mahabubul Haque Chisty, the then board chairman and chairman of the audit committee respectively, became deafening, depositors, which included government agencies, started pulling out money.
The two were forced to resign in November 2017, and the government stepped in to rescue the bank in 2018.
The state-owned financial institutions Investment Corporation of Bangladesh, Sonali Bank, Janata Bank, Agrani Bank and Rupali Bank bought 60 per cent stakes in the bank for Tk 715 crore.
The bank though is yet to get back on its feet despite a raft of measures by the government, including a ban on fresh loan disbursement for three-and-a-half years starting from January 2017.
In 2020, the bank managed to narrow down its losses to Tk 151 crore.
At the end of the first quarter of 2021, it faced a capital shortfall of Tk 382 crore, up from Tk 310 crore a quarter earlier, according to data from the central bank.
As of December last year, default loans in bank stood at Tk 3,455 crore, which is 61.6 per cent of its total outstanding loans.
A year earlier, as much as 72.3 percent of its outstanding loans were soured ones: Tk 3,989 crore.