Farmers Bank is still struggling to overcome the crisis despite funds injected from the state-owned banks as capital. Changes in leadership brought little change as the bank is not being able to return depositors’ money.
Officials said that the bank has kept its transaction limited, since no new deposits came.
Under the circumstances, state-owned banks have funded the Farmers Bank with Tk 7.15 billion as investment upon the government’s decision to rebuild it.
That, however, didn’t solve the problems, according to Farmers Bank’s government-appointed Adviser Pradip Kumar Dutta.
“However, the deep financial crisis has somewhat eased,” he told Bangla Tribune.
The initiative of selling bonds worth Tk 10 billion will alleviate the crisis significantly once sold off, added Dutta.
State-owned Sonali, Agrani, Janata and Rupali banks and Investment Corporation of Bangladesh (ICB) will be buying the bonds since private banks have showed no interest.
Agrani Bank’s Managing Director Shams-ul-Islam told Bangla Tribune, “We have provided TK 1.65 billion as capital other than over Tk 1.50 billion investment as FDR and call money.”
Three other state-owned banks also invested Tk 1.65 billion each while ICB invested Tk 550 million. Besides, four state-owned banks previously provided loans worth almost Tk 5.5 billion to Farmers Bank.
“We have also finalised the process of buying Tk 1 billion bonds and we are also a stakeholder of the bank now with our investments,” Agrani top official Islam said.
The bank is now operated as a Public Private Partnership (PPP) with the board of the bank, including five managing directors of state-owned farms. The government now holds 64 percent share in the bank while 36 percent among the private entrepreneurs. Prior to the change in its managing body all the directors were removed from the board and Chowdhury Nafiz Sharafat from the First Janata Bank Mutual Fund has been made the chairman.
With the Tk 7.15 billion capital from the five state-owned companies, paid off capital of the bank stands at Tk 11.16 billion.
Rupali Bank Managing Director Ataur Rahman Pradhan told Bangla Tribune, “The state banks’ MDs in the board of Farmers Bank will not solve problems overnight. It should not be expected either. We are still assessing the problems and scope of overcoming them.”
However, he said that, the bringing the state bank’s MDs in the troubled bank’s board will contribute in generating trust among public.
Deposit in the Farmers Bank was Tk 48.57 billion until the end of March this year while it disbursed Tk 50.28 billion in loans.
Bad debts in the bank are now Tk 9.67 billion that is almost 19 percent of the loan amount disbursed.
The bank made a loss of Tk 530 million in 2017.
The Farmers Bank secured its licence along with eight other banks in June 2013 in a politically influenced move.
In a report in October last year, the government said the Farmers Bank has created 'systematic risk' for Bangladesh's entire financial sector by taking loans with high interest rates from depositors and other banks while it does not have the capacity to repay.
The bank failed to attract depositors and existing depositors are increasingly opting to withdraw their funds.