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Farmers Bank going the way of Oriental

  • Published at 02:56 pm December 25th, 2017
Farmers Bank going the way of Oriental
Farmers Bank Limited, which critics say received approval because of political considerations, is now apparently going the way of private Oriental Bank. The bank has not received deposit of a single taka in the last one month. On the contrary, depositors withdrew deposits of over Tk1200 crore in the last few days, precipitating a financial crisis inside the bank. Like Oriental Bank, Farmers Bank now cannot even return the cash of the depositors. The management tried to convince many depositors temporarily with pay orders, but panic has spreaded among the depositors of Farmers Bank already. Depositors are gathering in the branches of Farmers Bank everyday to withdraw their cash, however, most of them are returning home empty handed. Many are also complaining to Bangladesh Bank. Although the Bangladesh Bank is not declaring it as bankrupt right now, it is constantly observing the situation at the bank.
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When asked, Farmers Bank adviser Pradip Kumar Dutta said: “It can be said that we are not receiving any new deposits. Those who had deposits are trying to withdraw those. They are crowding in branches. We are trying to keep them calm.” “Our major weakness is that we cannot return depositors’ money. All are trying to withdraw their cash because of panic. Around Tk1,200 crore deposits have been withdrawn in the last one month and a half. Initiatives are underway to take the banks total capital to Tk1,500 crore by selling of shares to bring back confidence of the depositors,” said Dutta. It was known that deposits of about Tk5,000 crore of around 525,000 depositors have remained stuck. Those with connections to the bank's top officials are now able to take some money out of their accounts, but most customers are returning disappointed. A depositor of Tk5 crore can receive only Tk50,000 while some are asked to visit the branch after a few days, according to sources in Motijheel, Gulshan and Dhanmondi branch of the bank.
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Despite the fact that the Farmers Bank has decided to sell shares of Tk899 crore to return the cash of depositors, the situation cannot be controlled as of now. In such a situation, the salary and allowances of around 1500 staff and employees of the bank is also in uncertainty. Many fear that the salary of the current month cannot be disbursed among the staff. While visiting the Motijheel branch of the bank on December 24, this correspondent found depositors thronging the bank to withdraw deposits, while bank officials are trying to convince them not to do so. Many clients were seen behaving rudely with the manager. [caption id="attachment_236152" align="alignleft" width="367"] A depositor filled-out the account closing form to shut down his savings account in Farmers Bank Bangla Tribune[/caption] Depositor Arifuzzaman Chowdhury, who has three Deposit Pension Schemes in Motijheel Branch, has met the manager several times over the last few days to encash those. Despite making written requests, there is no response, he said. “It’s been my 10th day of visit for withdrawing the cash, but I cannot get those,” he said. Another client Ripon Bishwash, a lawyer, has a double scheme Fixed Deposit Receipt of Tk10 lakh in the same branch and has been trying to encash that for a few days. With utter dissatisfaction, another client Masum Chowdhury said: “It’s been several days that I am visiting the branch to cash my FDR of Tk2.5 lakh and DPS of Tk50,000, but cannot get the cash. The bank is only giving me the runaround.”
Also Read- Mohiuddin Khan Alamgir resigns as Farmers Bank chairman
A Motijheel branch official of the bank, wishing not to be named, said: “We had to turn back the clients because of lack of money. It has had a negative impact on the depositors. Clients are rudely behaving with us.” A Bangladesh Bank top official, wishing not to be named, said: “Bangladesh Bank is observing the situation of Farmers Bank constantly. A new management was handed over the responsibility to recover from the crisis. If they fail, it may be declared as bankrupt after appointing an administrator.” Talks are ongoing to appoint former managing director of Meghna Bank Nurul Amin as new Farmers Bank MD. However, Bangladesh Bank spokesperson and executive director Subhankar Saha said: “Bangladesh Bank has taken necessary steps resolve the crisis at Farmers Bank. The central bank is taking initiatives every day to protect the interests of the depositors. As per law, Bangladesh Bank will do everything. The central bank takes different decisions keeping in mind protection of the banking sector and the depositors.”
Also Read- Central bank orders removal of Farmers Bank MD AKM Shameem
Recently, Farmers Bank founding Chairman and Awami League leader Muhiuddin Khan Alamgir and the bank’s Auditing Committee Chairman Md Mahabubul Haque Chisty had to resign their posts. On December 19, Bangladesh Bank sacked its Managing Director AKM Shameem. In such a situation, Bangladesh Bank is taking time to decide the next course of action. Bangladesh Bank former governor Dr Atiur Rahman said: “If the problems at Farmers Bank are not resolved, it would affect other banks. So, there is a need to appoint an administrator right now dissolving the current management of the bank. If the situation improves after six months, the responsibility can again be given to the directors.” Meanwhile, finance minister AMA Muhith has blamed the founders of the Farmers Bank Limited for its failure. “The founders have looted the bank. Bangladesh Bank had already looked into the matter and would take the necessary decision soon,” he said in Sylhet recently.
Also Read- Does Bangladesh need more banks?
Farmers Bank Limited started its journey in June 3 2013 after being approved allegedly under political considerations. Currently, it has 56 branches and 11 ATM booths. It has distributed loans of Tk4,413.38crore up to December 2016. Among those, Tk1,839.79 crore were distributed in the last year alone. As of December 2016, the deposits in the bank was at Tk5,063.61 crore, which was Tk3,482.66 crore a year ago. “It was not a wise decision to approve banks under political consideration. Also, there were a lot of mismanagement in the Farmers Bank from the beginning. The ordinary depositors are paying now because of it. If the confidence of the depositors cannot be restored, it would affect other banks as well. So, the directors and management authority need to take visible steps to bring back confidence of depositors,” Bangladesh Bank former governor Saleh Uddin Ahmed said. Earlier in 2008, Bangladesh Bank took reconstruction schemes to revive private Oriental Bank. There were changes in the ownership then. It is now in the market as ICB Islamic Bank. This article was first published on Bangla Tribune
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