As many as 42 government organisations are unable to recover their money from the troubled Padma Bank, formerly Farmers Bank, as a staggering Tk 60-billion deposits remain locked in it.
Of the deposits is Tk 8.74 billion from the Climate Change Trust Fund. Despite repeated formal requests, Padma Bank has not been able to release its FDR (fixed deposit receipt).
In a meeting held with the Bangladesh Bank (BB) on Thursday, a committee was set up to work on the recovery of these funds.
According to BB sources, the committee's top priority will be the return of the Bangladesh Climate Change Trust Fund's deposit once the bank's board of directors is formed and the collection process begins.
The state entities need to wait until the Banking Task Force completes its investigation and the Padma Bank's board is constituted.
BB spokesperson Husne Ara Shikha said, "Once the bank's board of directors is established, the legal process of recovering deposits will commence at the board's initial meeting."
As part of this process, the Climate Change Trust would get back its deposited money of Tk 8.74 billion on a priority basis, she told the FE.
Earlier, the government sought a roadmap to recover the money in question.
To this end, the BB sat at its headquarters on the day, bringing together senior representatives from Finance Division, Financial Institutions Division, Ministry of Environment, Forests and Climate Change, and Padma Bank.
Back in 2015, the then Farmers Bank received a Tk 5.08-billion deposit from the climate fund under climate change ministry across its Gulshan, Motijheel and Gulshan South Avenue branches with a one-year maturity period.
As the deposit matured without any payment of interest or principal, it was renewed until 2018, and the bank had repaid Tk 800 million in instalments.
By the end of fiscal year 2018-19, the total outstanding amount, including accrued interest, climbed to Tk 5.97 billion.
Despite multiple attempts by the depositor to withdraw the funds, the bank has yet to release any further payments. As of February 2024, Padma Bank's debt stood at Tk 8.74 billion, including interest.
The bank first faced liquidity issues due to significant irregularities in 2013, just three years after its inception.
Nonetheless, organisations like the Climate Change Trust Fund continued to invest substantial sums for attractive interest rates and alleged political clout.
To address this situation, the interim government, led by Chief Adviser Dr Muhammad Yunus, held an advisory council meeting on September 12.
The meeting suggested that a comprehensive roadmap be made with inputs from all relevant parties, including the BB, to prioritise recovering these funds.
Financial irregularities and corruption have affected the country's financial sector over the years, but issues regarding the recovery of government funds from banks have rarely been discussed in cabinet or advisory meetings.
Several other government institutions also have funds trapped in Padma Bank.
For instance, the Chittagong Port Authority recently sought assistance from BB and finance ministry to recover its deposit of Tk 1.79 billion.
The state-backed Bangladesh Jiban Bima Corporation had Tk 1.09 billion deposited in Padma Bank, which grew to Tk 1.25 billion by 2018 with interest.
The insurer has so far sent 31 letters, but to no avail. It is yet to receive funds.
Similarly, the Titas Gas Transmission and Distribution Company held a Tk 530-million fixed deposit in the bank from 2015 to 2018, which it later renewed until 2029, agreeing to a phased repayment.
On the other hand, the Bangladesh Telecommunication Regulatory Commission also has Tk 250 million held in an FDR with the bank in question.
Within three years of its establishment, Padma Bank came under scrutiny for severe financial irregularities.
The government intervened in 2018 to revive Padma Bank, with Sonali Bank, Janata Bank, Agrani Bank, Rupali Bank and the Investment Corporation of Bangladesh collectively investing Tk 7.15 billion for a 60-per cent stake in it.
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