The central bank has given three months' timeframe for improving the condition of trouble-torn Farmers Bank Limited (FBL), bank's director Dr. Mohd Atahar Uddin said on Wednesday.
"The central bank has asked the new board of the bank to improve its corporate governance and solve liquidity shortage problem within three months," he said while speaking to reporters following a meeting with Bangladesh Bank (BB) Governor Fazle Kabir.
The BB governor called on the bank's reconstituted board members at central bank on Tuesday.
Mr Atahar Uddin also said the directors will inject new capital from two Tk 5-billion bonds and from their own sources to improve liquidity situation in the bank.
"We will get the bonds' approval within two to three days."
However, he refused to elaborate as to how much money they would invest afresh from their own sources.
BB executive director (ED) and spokesperson Shuvankar Saha confirmed giving a deadline, but he did not clarify whether it is three months or not.
He said FBL has been suffering from liquidity crisis. The central bank asked it to take 'effective steps' to improve the situation.
The BB ED said the new board was asked to speed up the bank's loan recovery activities and take austere measures to minimize its expenditures.
On Monday, ruling Bangladesh Awami League (AL) MP Muhiuddin Khan Alamgir resigned as the FBL chairman.
The bank's audit committee chairman and director Mahabubul Huq Chishti also left his position on the day.
The bank made the decisions at a special meeting on Monday. The meeting also appointed a new chairman, and formed new executive committee, audit committee and risk management committee.
On Sunday, BB served a notice on the bank, asking why its Managing Director (MD) A K M Shameem would not be removed.
However, Dr. Atahar Uddin said the central bank allowed the MD to continue, as he has only a few days left as per his job contract with the bank.
"Mr Shameem replied to the central bank's show-cause, and he can continue until his term."
The FBL director also said they will go from door to door to recover the defaulted loans, because the money belongs to the depositors.
"We will try to improve the situation, and do everything to save the bank. You will see the result (of our efforts)."
But he refused to take any responsibility of the debacle of the bank as a member of its old board.
Replying to a question, he said it is not their job to take actions against the responsible directors and officials of the bank.
FBL began operations in June 2013 with Tk 4.0 billion capital. However, irregularities in it started surfacing within a year. Between September and November 2015, BB conducted special inspections at three branches of the bank at Gulshan, Motijheel and Shyampur in the city, and found gross violations of banking rules in disbursing loans worth around Tk 4.0 billion.
According to the central bank, FBL has disbursed loans beyond the limit permitted in the regulations, and much of it has turned into bad debt, creating a liquidity crisis.
The bank has also failed to attract depositors. Moreover, existing depositors are increasingly opting to withdraw their funds.
As of September, the amount of the bank's defaulted loans stood at Tk 3.77 billion or 7.45 percent of the total loans disbursed, according to BB data.
In a recent report, the government flagged the bank as 'risky' for the financial sector, as it is hit by reckless lending and irregularities.
According to the report on FBL, it loosened rules of disbursing loans and internal control system soon after launching in 2013.
BB appointed an observer for the bank last year after finding gross irregularities in disbursing loans of billions of taka only within three years of operations - a move halted by the High Court later.
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