Former Farmers Bank's new management seeks waiver of Tk 1.44b penalty

Padma Bank Limited, formerly known as Farmers Bank, has sought waiver of a penalty amounting to Tk 1.44 billion imposed by the central bank for its failure to comply with the required cash reserve requirement (CRR) and statutory liquidity ratio (SLR), officials said.

In an appeal to the Bangladesh Bank (BB), the Padma Bank said the penalty was imposed by the central bank on the former Farmers Bank Limited, which could not comply with the CRR and SLR rules properly.

"It's not the liability of the present management of Padma Bank. Rather, the penalty was imposed on the then authorities of the former Farmers Bank," Ehsan Khasru, managing director (MD) and chief executive officer (CEO) of the fourth generation private commercial bank (PCB), said on Tuesday.

Mr. Khasru also said Padma Bank wants to move forward. "So, we appealed to the central bank for the waiver of the penalty."

The central bank has now decided to send a letter to the ministry of finance, seeking opinions on the issue in line with the Article 121 under the existing Bank Company Act, according to the BB officials.

The issue was discussed at a meeting of the BB's board of directors on Monday.

"We're taking preparations to send the letter to the ministry as per our board's decision," a BB senior official said in reply to a query. Padma Bank, however, is now complying with the CRR and SLR rules properly, he added.

Another BB official said the then Farmers Bank could not comply with the CRR and SLR requirements mainly due to the liquidity crunch it faced in 2016-17.

On December 19, 2017, the central bank removed the Farmers Bank's MD and CEO AKM Shameem for his alleged failure in liquidity management and disbursing loans bypassing the BB's instructions.

Padma Bank Limited inaugurated its operations on January 29 last year with a new vision to become a trusted custodian of financial assets belonging to all its valued clients.

Currently, the four state-owned commercial banks (SoCBs) -Sonali, Janata, Agrani and Rupali -- and the Investment Corporation of Bangladesh (ICB) have 68 percent stakes in the Padma Bank.