Bangladesh Bank (BB) removed Tuesday Farmers Bank Managing Director (MD) and Chief Executive Officer (CEO) AKM Shameem for his alleged failure to maintain the allowable ADR limit and stick to embargo imposed by it on loan disbursement.
"We've removed the Farmers Bank's MD and barred him from taking employment directly or indirectly in any bank for three years," Subhankar Saha, spokesperson of the central bank, told the FE.
The managing director has failed to protect the interests of depositors, he said in reply to a query.
Mr Saha, also executive director of the BB, said the central bank has already sent the order to the authorities concerned of the bank for taking necessary action in this connection.
BB governor Fazle Kabir has issued the order as per the recommendations put forward by the central bank standing committee.
The removal order was issued just 12 days before his retirement. He (Shameem) was supposed to go on retirement on December 31, 2017.
The standing committee had recommended removal of the Farmers Bank Limited (FBL) MD and CEO as it declined to accept his statement, according to BB officials.
Earlier, the central bank formed a four-member standing committee, headed by its deputy governor Abu Hena Mohd Razee Hassan, to hear the MD's representations regarding his alleged loan disbursement defying its (central bank's) embargo and liquidity problem being faced by the fourth-generation private commercial bank (PCB).
On November 26 last, the central bank issued a show-cause notice on the MD and CEO of FBL in line with the existing Banking Companies Act, asking him to explain as to why he should not be removed. He was asked to give explanation within seven working days.
In the notice, the MD was instructed to explain two issues -- ongoing liquidity crisis of the bank and fresh loan disbursement violating an embargo imposed by the central bank.
The BB also asked him to explain as to why the central bank should not remove him from the post of FBL MD and CEO in line with Article 46 of the Banking Companies Act 1991.
If he felt aggrieved by the action of the central bank, taken under Section 46 of the Bank Companies Act 1991, he may appeal to the Board of Directors of BB against the orders.
The BB's latest action came against the backdrop of higher credit growth than deposit that threw the fourth-generation bank into liquidity crunch.
The bank's advances-deposit ratio -- usually known as ADR -- has crossed 85 per cent for several months, which contravenes the central bank's rules, the officials added.
The ADR of Farmers Bank stood at 86.23 per cent as of September 14, according to the central bank's confidential report.
During the period under review, the FBL's deposit, excluding inter-bank balance, reached Tk 5.15 billion while advance, excluding inter-bank balance, was Tk 48.70 billion, it added.
The central bank earlier set the safe limit of ADR at 85 per cent for conventional banks and at 90 per cent for Shariah-based Islamic banks.
Earlier on 27 November last, the board of directors of the FBL was restructured with electing a new chairman and a vice-chairman to the PCB.
Mohammad Masud and Maruf Alam were elected chairman and vice-chairman respectively of the private bank.
The same day, ruling Awami League MP Dr Mohiuddin Khan Alamgir, also a former minister, resigned as FBL chairman. The bank's audit-committee chairman and director Mahabubul Haque Chisty (Babul Chisty) also resigned.
This happens to be a latest event of top-level changes in a number of banks, and close on the heels of shake-up in the management of NRB Commercial Bank Limited (NRBCBL).
Earlier on December 06 last, the central bank ordered removal of NRBCBL MD and CEO Dewan Mujibur Rahman on various charges including wrongful lending.
A day after the removal order, the High Court (HC) stayed the Bangladesh Bank's decision on removal of the NRBCBL MD and CEO.
The HC also issued a rule, asking the BB and the government to explain why the central bank's decision to remove Rahman should not be declared illegal.
However, the reconstituted board on December 10 last appointed Deputy Managing Director (DMD) of NRBCBL Kazi Md Talha as acting MD and CEO while incumbent MD and CEO Mr Rahman was sent on leave with full financial benefits to avoid legal complications.
Meanwhile, a special inspection of problem-ridden PCB has continued to assess its real financial health after heads rolled over a crisis of the trouble-hit fourth-generation bank.
Two of the branches -- Gulshan and Motijheel -- along with the FBL's headquarters, have already been investigated by the BB inspectors.
Sources, however, said the inspection report is likely to be submitted to the authorities concerned by the end of this week.
The central bank appointed an observer to the FBL on January 13 last for improving its financial health through strengthening monitoring and supervision of the bank's operations.
The appointment came after detecting irregularities in sanctioning and disbursing loans and hiding information on non-performing loans amounting to around Tk 4.0 billion in the FBL.
Three central bank investigation teams found irregularities during inspection of the bank's Gulshan, Motijheel and Shyampur branches in Dhaka between September and November in 2015.
The FBL started its journey on June 03, 2013 aiming to provide efficient banking services to all customers and contribute to socio-economic development of the country.
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