The central bank has exempted four state-owned banks of legal provisions that prohibited them from buying shares of troubled Farmers Bank.
On Tuesday, the Bangladesh Bank issued a circular waiving certain provisions of the Banking Companies Act 1991 for Sonali, Janata, Rupali and Agrani banks.
The order exempts the banks from complying with the Act’s section 14a, 26a and 23 (1a).
Farmers’ bank has been bedevilled by several types of irregularities, especially in loan release since its establishment by ruling Awami League MP and former minister Muhiuddin Khan Alamgir four years ago.
Alamgir resigned recently as the chairman after facing allegation that the bank has disbursed loans beyond the limit permitted by the rules and much of it has turned into bad debt, creating a liquidity crisis.
The bank failed to attract depositors and existing depositors are increasingly opting to withdraw their funds.
As of September 2017, the bank’s defaults stood at Tk 3.77 billion, 7.45 percent of the total loans disbursed, according to data from Bangladesh Bank.

Between March and June last year the bank only recovered Tk 70 million in loans. The bank's top 10 defaulters alone owe Tk 1.34 billion.
Finance Minister AMA Muhith has blamed the founders for alleged loan scandal and mismanagement at the Bank.
“The founders looted the bank. Bangladesh Bank is now taking care of it, it may take some time for the bank to get over from the crisis,” he said in December last year while speaking the media.
Muhtih’s remarks came three weeks after the bank’s chairman resigned.
The government has been mulling several ways to pull out the bank from the crisis, which included injecting funds from the state-owned banks and the Investment Corporation of Bangladesh (ICB).
The financial institutions, however, wanted to hold shares of Farmers Bank against the fund.
The regulatory bar has now been removed with Tuesday’s Bangladesh Bank circular.