Farmers Bank MD dismissed

Bangladesh Bank has sacked Farmers Bank Managing Director AKM Shameem for his failure to protect the depositors' interests and manage liquidity.

The central bank sent a letter to the Farmers Bank authorities yesterday morning for Shameem's removal. The order took effect immediately, BB Executive Director and spokesperson Subhankar Saha told The Daily Star.

In its letter, the banking regulator mentioned that Shameem has been removed from the bank in line with the Banking Company Act 1991, and he cannot be MD of any bank in the next three years.

Shameem joined Farmers Bank as additional managing director in 2013. He was made MD last year, and his stint was supposed to end on December 28.

Earlier on November 27, Muhiuddin Khan Alamgir, chairman of Farmers Bank, and Md Mahabubul Haque Chisty, chairman of its audit committee, were made to resign from the bank's board of directors for their alleged involvement in loan irregularities.

Experts say the restructuring of the board alone is not enough to save the bank and protect the depositors' interests as the bank does not have the capability to run its financial operations.

Some of them have suggested that the BB should take over Farmers Bank and appoint an administrator.

Farmers Bank has made headlines over the last two months after the BB found corruption and irregularities at the bank's three branches. The lender had allegedly indulged in irregularities just within a year of its inception in 2013.

Between September and November 2015, the BB conducted inspection at the bank's branches in the capital's Gulshan, Motijheel and Shyampur, and detected gross violations of the banking rules in disbursing loans of around Tk 400 crore.

Some of its directors, including Alamgir and Mahabubul, were allegedly involved in sanctioning these loans in violation of the credit rules, found the central bank.

Recently, there have been allegations that due to a severe cash crunch, the bank failed to pay back many of the depositors who approached it to encash their fixed-term deposits upon maturity.

Around a couple of weeks back, the bank failed to pay more than Tk 229 crore to Bangladesh Climate Change Trust Fund (BCCTF) on maturity of its fixed-term deposits.

The BCCTF, a government trust formed to tackle risks and adverse effects of climate change, deposited Tk 508.13 crore with the bank's Gulshan and Motijheel corporate branches in November and December last year under fixed-term deposit schemes.

Five of the deposits amounting to over Tk 229 crore became mature between November 24 and December 7. When the BCCTF contacted Farmers Bank to encash the deposits, the bank made excuses to delay payments.

Seeking anonymity, a BB official told this correspondent, “The bank's managing director [Shameem] has failed to discharge his responsibilities to protect the interests of depositors as well as the funds of the shareholders.”

Earlier on November 26, the BB sent a letter to Shameem asking him to explain why he would not be removed from the bank. Following his explanation, a BB standing committee summoned him for a hearing on December 13.

The central bank was not satisfied with his response and removed him from the bank, added the official.