(MENAFN- Gulf Times) Bangladesh Prime Minister Sheikh Hasina's top political aide and lawmaker Mohiuddin Khan Alamgir has been forced to resign as chairman of Farmers Bank after the central bank asked him to quit over to his alleged involvement infinancial irregularities.
The bank's audit committee chairman Mahabubul Haque Chisty has also stepped down.
The central bank Bangladesh Bank (BB) asked the two directors to resign over their alleged involvement in irregularities.
In a statement, the BB said the restructuring of the board would help the Farmers Bank restore confidence of the depositors who have been withdrawing funds due to its
deteriorating financial health.
He is also chairman of the Parliamentary Standing Committee on Public Accounts.
Despite repeated attempts, Alamgir, former home minister, could not be reached for comments.
Farmers Bank director Mohammad Masud has replaced Alamgir as the new chairman. Another director, Maruf Alam, has been made its vice chairman and also chairman of the audit committee.
Earlier on Sunday, the BB issued a notice to Farmers Bank managing director A K M Shameem, asking him to explain within a week why he would not be removed him from his post for failing to manage the bank efficiently and address its liquidity crunch.
It also asked him to explain why the bank disbursed fresh loans despite having restrictions on lending, according to the BB notice.
Earlier in January, the BB slapped restrictions on the bank in disbursing loans and opening new branches, given its precarious financial health.
Non-performing loans at the bank increased significantly in recent months as the board continued to sanction and disburse loans in breach of the rules.
Between September and November in 2015, the BB conducted special inspections at three branches of the Farmers Bank in the city's Gulshan, Motijheel and Shyampur, and found gross violation of the banking rules in disbursing loans of around 4bn taka.
Some directors of the bank were allegedly involved in sanctioning loans, violating the credit rules.
Last year, the central bank appointed an observer to the bank to help it restore corporate governance, but the initiative did not yield any results.
As of September, Farmers Bank's non-performing loans (NPLs) amounted to 3,776.8mn, up by 1bn taka from the previous year. The NPLs now account for 7.45% of the bank's total outstanding loans.
According to a BB report, 13 counts of irregularities were found in the bank, including disbursement of loans to non-existent companies. The bank also gave loans to its own directors as well as those of other banks, violating the credit discipline.
Besides, the bank disbursed loans to defaulter clients against forged Credit Information Bureau reports, and took the burden of a number of bad loans from other banks, flouting the banking rules.
The bank has so far been fined 180mn taka for its failure to maintain the statutory liquidity ratio and the cash reserve requirement with the central bank.
Last week, the BB gave the cash-strapped bank a short-term loan of 960mn taka to help it meet the urgent liquidity demands.
Incidentally, despite a series of banking scams in Bangladesh, Finance Minister A M A Muhith announced on Monday that he would give permission
to three more new banks.
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